Financial Power of Attorney
A General Durable Power of Attorney, otherwise known as a Financial Power of Attorney, is a document that you sign during life that allows another person, your Agent, to make financial decisions for you or otherwise manage your finances. The General part refers to the types of actions you are allowing your Agent to do. The opposite would be a limited power of attorney, which only allows your Agent to perform a limited power under limited circumstances. The durable part refers to the fact that the document will remain in effect even if you become incapacitated in the future. This document is valid during the life of the Principal, and expires at death.
There are two options available for when this document can become effective. Our clients can choose to have this document become effective immediately, or to have it spring into effect on some future date or event, usually the incapacity of the Principal. Each option has advantages and disadvantages and should be tailored to the individual making the plan.
This document is often called a Financial Power of Attorney as it is generally used to grant an Agent the ability to direct the Principal’s finances. There are actually dozens of powers that go along with a General Durable Power of Attorney, for example the power to execute deeds on real property, the power to hire professionals, the power to fund accounts, etc. It is important that these documents are tailored to the individual granting the power. We will want these documents to be a broad as the Principal needs them to be to cover their unique circumstances. For example, if we decide to leave a power out of the document, and we later need to exercise that power, we will be looking at filing a guardianship and asking a judge to grant that power to the Agent. It is of the utmost importance that the powers granted conform to the Principal’s situation.
For married individuals, it is still important to exercise this document for any property that is not jointly owned by you and your spouse, otherwise you we may end up looking at a guardianship proceeding.
Similar to Revocable Living Trusts, General Durable Powers of Attorney can be revoked or changed from time to time. Our attorneys recommend reviewing these documents if you switch states, or once the documents become three to five years old. Most of the time, changes made to these documents are in regards to who will be Agent when the power needs to be exercised. It is important to ensure that you keep this document up to date with listed Agents being people that you trust having access to your finances.
A General Durable Power of attorney is only one aspect of a complete Estate Plan. The use of General Durable Powers of Attorney along with Health Care Powers of attorney and other ancillary documents can protect you should you face incapacity during your life. While we offer these documents in all of our estate planning packages, we also offer them individually as stand-alone documents.