How Does Financial Power of Attorney Work in Arizona?
A financial power of attorney is an appointed individual who acts on behalf of another, but how does this process work in Arizona? Learn more in this guide.
Did you know that many people over the age of 55 do not have a plan when it comes to designating power of attorney? This comes with a large number of consequences. For example, they may be unable to communicate with insurance companies or banks if the person passes away.
Not everybody understands the key attributes of financial power of attorney. A financial power of attorney is also know as a durable power power of attorney This is especially true when it comes to a financial power of attorney in AZ. Let's take a look at the key factors you need to consider.
What Is Power of Attorney?
A power of attorney is the official designation of legal authority or agent to make decisions on behalf of someone else.
The person who has the power of attorney is known as the “attorney in fact” or “agent.” The person who gives the power of attorney is known as the “principal”. "Attorney in fact" is not used as much in Arizona durable power.
It's important to note that this isn't only applicable when the principal is deceased, but also when they are incapacitated. A power of attorney expires when a person passes away.
We usually help clients with 2 types of powers of attorney: Financial or durable power of attorney and health care power of attorney. Some people use the term durable health care power, that is not really a term used in Arizona. A living will to help doctors with medical decisions is usually also done when durable POAs are executed. In this case a group of doctors will act as attorney in fact in your legal document.
How Does It Work in Arizona?
There are certain laws in Arizona concerning power of attorney, which means you must follow specific guidelines. In Arizona, your agent is allowed to act on your behalf when it comes to financial decisions. This could include collecting Social Security benefits and other types of income, making investments, dealing with bank accounts, applying for government benefits, or selling real property or executing other real estate transactions, and other financial matters. An Arizona power of attorney done for finance can't be used for health care decisions. It does not grant medical power.
Your agent can also be responsible for paying bills, filing taxes, or even transferring funds to other accounts. Financial institutions usually prefer an power of attorney done by estate planning attorneys.
An power of attorney is not just an attorney form. It needs to comply with Arizona law as well as be signed in front of 2 witness and properly notarized by a notary public. It will grand the agent specific powers.
A power of attorney needs to be done when the principal is still of sound mind. The estate planning attorney that you work with will only help you if you have the mental capacity to sign the attorney document. The estate planning attorney will also make sure that no undue influence is exercised over the principal to make sure the principal's intent are genuine.
Responsibilities and Duties of the Agent
It's important to note that the agent must always act in your best interest and for your benefit.
Your Power of Attorney can also be revoked at any time if you choose. In addition, the agent is legally responsible for managing and monitoring your finances responsibly.
This includes keeping detailed records of all transactions and providing you with an accounting of those transactions. The Arizona legislation outlines specific rights for both the principal and the attorney. It's essential that each party understands these rights completely before signing any legal documents or agreements.
Types of Financial Powers of Attorney Available in Arizona
There are two types of financial powers of attorney available in Arizona. The first is a “general power of attorney” and the second is a “durable power of attorney.” General power of attorney can only be used while you're alive and competent, while a durable power of attorney will remain valid even if you become incapacitated.
Many people prefer using a durable power of attorney because it ensures that their financial affairs are managed according to their wishes. A subsequent disability may prevent you from creating one later.
Selecting an Agent
When choosing an agent, it's important to select someone you trust who can reliably manage your financial affairs. The person should possess a high level of integrity, have good communication skills, and be willing to work on your behalf without compensation.
As previously mentioned, the agent is obligated to always act in your best interest. It's also important to consider how the agent will access your finances.
You should discuss openly with them any concerns or limitations you may have. For example, if you do not wish for the agent to access all of your accounts, then make sure this is clearly stated in the power of attorney documents. If you are not comfortable working with them, then it's best to find another person who can fulfill the role.
Otherwise, you run the risk of failing to meet your goals.
Possible Limitations and Restrictions
Unfortunately, there are certain limitations and restrictions that can be placed on the agent.
These can include the power to make gifts, buy or sell real estate, manage assets in trust accounts, or enter into contracts. It's important to discuss these issues with your attorney before signing any documents. Otherwise, it could cause significant financial harm if they are not taken into consideration.
An experienced estate planning attorney should be able to explain that well to you.
Termination and Revocation of Financial Powers
There may be cases when you need to revoke the financial powers of your agent. This can be done at any time if you choose, but it must be done properly.
You may also need to terminate the power of attorney in certain situations such as when the principal passes away or becomes incapacitated. Other situations might include when the agent is no longer able to handle the responsibilities or if there is a conflict of interest.
How Do I Know When I Need to Designate Power of Attorney?
More often than not, you don't know when an emergency will arise requiring someone to manage your affairs. Therefore, it's important to designate power of attorney before any potential emergencies occur.
This will ensure that your wishes are respected and that your finances and assets are managed in accordance with the powers granted. An agent's spouse is usually the first choice.
What Are Common Mistakes People Make?
One of the most common mistakes people make when designating a power of attorney is not being clear about their wishes or expectations. It's important to be as specific as possible in both your power of attorney documents and in conversations with your designated agent. Additionally, it's important to provide them with access to all pertinent information and documents they may need to properly manage your affairs.
Another common mistake is the lack of witnesses and a notary public. In Arizona you need to sign your POA in front of 2 witnesses and 1 notary public.
Failing to do so could result in serious financial or legal consequences. If you become incapacitated a guardianship or a conservatorship may be required.
Furthermore, it's important to make sure that all parties understand these rights completely before signing any legal documents or agreements. This will help to ensure the wishes of the principal are respectfully and legally honored.
Don't Overlook Financial Power of Attorney
Overall, financial power of attorney is a valuable tool for ensuring your affairs are managed responsibly. By understanding the rights and responsibilities of both parties involved, you can ensure that your financial needs are taken care of in the event a situation arises.
Looking for more information on how we can help? Feel free to get in touch with us today to see what we can do.
Call Citadel Law Firm today to schedule your free estate planning consultation. You can call (480) 565-8020 or click here to schedule. Our estate planning lawyers believe that every family is different. Not everybody need a Living Trust or a Last Will and Testament but most people do need a Power of attorney. Call today, we will be pleased to help.