Those who anticipate a far off time when they may not be able to see to their affairs—be it financial, operational, and personal, among others—on their own may decide to look towards a power of attorney. It may not be as complex or heavy as other forms of legal documents, but it definitely serves it purpose well enough to come highly recommended for just about anybody with important things to take care of. One does not need to be old or even already incapacitated to get one, as you will soon see for yourself.
Often abbreviated to POA, a power of attorney is an authorization letter written for the purpose of having another person act on the writer’s behalf concerning business, private affairs, and various other kinds of legal matter. The one given the power to do all of these things is known as the agent, or the attorney-in-fact, while the one creating the POA is referred to as the grantor. It goes without saying that this document’s creation can only done when the grantor possesses the right kind of mental capacity. Various kinds of power of attorneys focus on the different circumstances in which the authorized power given by grantors come into effect.
According to Nerd Wallet, among the duties that you can expect agents to contend with include: banking duties, business management, asset distribution, the filing of taxes, contributions to charity, and the handling of any form of government benefits, among others. When considering people to serve as agents, be sure that you pick those who are reliable and unlikely to abuse their power and position. It was AARP that reported that approximately 55% of financial abuse done to the elderly are by untrustworthy power of attorney agents. MarketWatch takes this even further with its report that elderly Americans are known to lose up to $2.9 billion on a yearly basis because of said financial abuse.
A power of attorney is not a singular type of document as you already know. Different intentions necessitate different types. The list compiled below already includes a brief description for each type to enlighten those who wish to know more about them.
Once you have determined that you are in need of a POA, the next step is to acquire one. It is worth noting that you are fully capable of creating one on your own, provided you have the right set of instructions to guide you. Pay close attention to the ones detailed below to experience a much easier and faster creation process.
Your first act as a would-be grantor would be to decide on who gets to serve as your agent. This is a highly significant decision to make and should not be made lightly in the least. It can be any kind of person, as long as you’ve got enough confidence in their ability to execute your vision for you. You may turn to family, friends, spouses, and even business associates. Before picking any of them, be sure to weigh in the pros and cons of each person.
After you have finally chosen the person whom you think is best suited for the role of an agent, the next decision you must face is when he or she is to act on your behalf. This step will also be influenced by your reasons for acquiring a power of attorney in the first place.
In addition to the specific time that your agent gets the authority to act on your behalf, there are also specific details to consider including in your power of attorney. This may include what the required acts and duties are, how long he or she is to perform said duties, what the limits of his or her authority are, and more. Decide on each one before committing them to the actual document.
In writing the document proper, the thing you need to get out of the way as soon as possible would be the writing of the caption. Place it at the top of the document so that any reader won’t miss it in the least.
Look back at step three and you should be able to perform this particular step with ease. Having determined the specifics, this is the part where you list down all of the things that your appointed agent is going to do. Nothing more, nothing less. Be as detailed as possible to ensure that there won’t be any kind of confusion in regards to the duties.
This is yet another step that dates back to the third step and even the second one, this last thing you need to do is write down the specific date in which your authorization of power to your agent becomes official. If there is no specific date singled out by you, or if the authorization is more circumstantial, then be sure to specify what circumstances will need to come to pass.
Another aspect of this kind of document to keep in mind would have to be the dos and don’ts. Each one will help improve your experience by leaps and bounds while avoiding all of the pitfalls that are scattered all around. Some of these are basic enough and can be done without reminder, but its importance is such that placing emphasis on it becomes practically necessary.
Do consult an experienced attorney for your needs.
The aid of an attorney is something that should go without saying, but at the same time it is something that also bears repeating. Many people would even go to an experienced attorney for any issues they may have over finances, real estate, vehicle, and family matters. When it comes to the responsibilities and duties that need to be done for any of those things, power of attorneys will come in handy. You might as well have the attorney draw the document up for you or at least have him or her review the one you have come up with yourself. One way to prevent yourself from neglecting this is to put it on a sample to-do list or even on a goal setting template.
Do choose prospective agents collectively.
An agent is the single most important decision that you need to focus on. Because of all the risks involved, it comes highly recommended that you pick more than one. In fact, you are better off choosing them collectively. There are many reasons for you to do this and the primary one would be to ensure that the risks to your assets are mitigated. Having only a single person accumulate authorized power over your estate can lead to disaster if that person turns out to be untrustworthy. Do yourself a favor and get more than a single agent.
Do keep backups for worst-case scenarios.
This one is a bit related to the previous tip. A power of attorney can only assign specific authority to a single agent at a time. Therefore, to help you with potential troubles, it may be prudent to have more than one power of attorney to assign more agents to help you manage your affairs. Those can be your backups for when things do not go the way you initially wanted them to go.
Do implement steps to make sure the agent is supervised.
People with the most authority cannot be allowed to go unchecked. As a grantor, you need to make sure that whoever you decide will act on your behalf when you cannot act for yourself is going to stick to whatever specific parameters that you have set up. Said parameters can already be specifically written into the power of attorney itself. There are reasons why some power of attorneys are very limited in their scope. To save yourself from a lot of heartache and problems down the road, make sure you’ve got steps that will keep your agent properly supervised and accountable.
Do not choose agents you are uncomfortable with.
One other thing that goes without saying is that you need to pick agents that you are generally comfortable with. Some people may think that they do not have much choice and decide on appointing a family member or a spouse as their agent. In truth, you still need to follow your gut. If there is anything at all that makes you think that a certain person won’t be good for you or your personal, professional, and financial affairs, then you should hone in on that instinct and decided against making that person your agent. And nothing that person says should convince you otherwise either. This is entirely your choice to make.
Do not choose multiple family members as agents.
Because of the fact that family members can be the easiest people to get a hold of, one may be mistaken into thinking that having several of them act as agents is a good idea. It isn’t. Having one family member do so can be a good idea, but by getting more than that, you run the risk of creating conflicts of interests between them. In the event that you are incapacitated, your family members-turned-agents may have different views on how to execute on the authority your power of attorney have provided them. And when that happens, you may find things even worse than before. So do yourself a favor and appoint one family member at most. The rest of your agents can be trusted friends or at least people who do not necessarily know each other.
Do not allow your agents to spend needlessly.
The handling of your finance is a common reason to have an agent work on your behalf should you find yourself incapacitated for whatever reason. Be aware that people can get careless when they are given authority to spend money that isn’t their’s. To prevent something bad from happening to your finances, keep your parameters strict concerning what your agents are to spend on and how much of your money will be used. The more limited their capacities actually are, the easier it becomes for you to remain in control to mitigate financial risks on your part. Having a strategic plan in place can help you in setting up these parameters.
Do not hesitate to remove untrustworthy agents.
As stated previously in the ‘What Is a Power of Attorney’ section of this article, one of the most prevalent forms of financial abuse done to older Americans is the abuse done by those appointed as agents through power of attorneys. Since this kind of problem does not have to be exclusive to the elderly, you or your loved ones need to be on the lookout for anything suspicious done by your agent. Should any agent you’ve appointed lose your trust and confidence, then do not hesitate to remove him or her from the role.
There are a lot of things to take note of and consider when it comes to power of attorneys, so it comes as no surprise that it is far from the simplest kind of document. You should now be in a much better position to create your own and get things done with other people’s help, but there are those who may not want to create their own document from scratch. Fortunately, there are numerous power of attorney templates out there that can be easily found and downloaded. All you have to do once a suitable template has been downloaded is to edit it with your necessary information. After that, you are free to print it out or send it to others via email as you see fit.
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