Power of Attorney
Power of Attorney
Estate Planning is the preparation that a person does to prepare his assets and ambitions in the event of his death or any incapacitation. This planning is one of the most important ways a person secures his assets and secures his family’s future should anything unplanned happens.
During the lifetime of a person, there can be a situation where he or she will not be able to protect their assets or even perform their family obligations. During such times, it is advisable to delegate certain powers and authorities to another person to act on their behalf. To do this, a person has to prepare a Power of Attorney in the name of another person they want to transfer their power to.
A Power of Attorney is a legal document which gives the right of a person to perform or powers of transacting in matters relating to property, banking, legal and judicial proceedings, tax payments, etc. to another person due to certain reasons like being out of the country or getting terminally ill or not able to look after one’s obligations in those matters, etc. A Power of Attorney is an authority given by a written, formal instrument.
Principal/ Grantor/ Donor – The person who grants the other person the power to act on his behalf is termed the grantor or principal or donor.
Attorney-in-Fact / Agent/ Donee – The person to whom the power is granted is termed the Attorney-in-Fact or agent or donee.
Letter of Intent is an informal document to let your family members or close ones know about your properties. It is not legally binding.
Attorneys at The Victoria Law Group can help you in discussing a Power of Attorney.
Top Questions For Power of Attorney:
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A Power of Attorney (POA) is a legally valid document that gives power to one person (the POA Holder) to act on behalf of another person (The Principal). The Agent or the POA Holder can have unlimited power to act in various matters on behalf of the Principal, or have the limited legal power to act for the property, finances or medical care. It depends on the clauses of the POA agreement between them. Usually, the Agent or the POA holder acts on behalf of the Principal when the Principal cannot appear in person due to any reason.
The main reason behind giving someone a Power of Attorney is “convenience”. There are many reasons why a person cannot be available at any place and at any time, so to keep the transaction seamless, one person has to transfer his power to another person. There may arise a time when a person cannot perform his duty on his own because of incapacity or absence because of travel, accident, illness, which can be temporary or permanent and even after the death of the Principal the Agent will act on his behalf.
If you do not choose someone who will look after your property, assets and personal or business affairs, then if it becomes necessary, the Court will intervene in this regard and take control of it. It may designate a Guardians, Conservators or Committees as per the Law of the Land. At that moment, your right to choose who will act for you will be seized, which may cause a great loss to you.
Financial Power of Attorney – A Financial Power of Attorney is a type of POA which allows a person to help the Principal with the matters related to finances. The principal can limit and also decide the acts of the Agent, which he is supposed to do on behalf of the Principal. The Agent can perform all these related matters, such as Fund Support and Care, manage the property, Handle Legal Claims, File Tax Returns and many more. Power of Attorney has to follow the written or oral orders of the Principal. If he performs beyond his scope, then he only will be liable.
There is no guarantee that a POA will be recognized by the third parties, such as the Social Security Administration, the Veterans Administration or the Internal Revenue Service. The principal must ensure that a Power of Attorney is presented to the agency in a way that contains the particular wording mandated by each agency’s specific form.
Durable Power of Attorney – A Durable Power of Attorney is prepared when the Principal wants to delegate his power to another person as he is mentally incapable of performing the work. Mental incapacity can arise because of various reasons such as illness, injury, accident or old age. When these occur, and the Principal has not appointed durable POA, the Court will appoint one at its discretion. A principal who is already mentally incompetent cannot appoint a Durable POA; thus it should be signed before the incapacitation. After the death of the Principal such a Durable POA ceases to exist.
The most efficient and secure way to prepare a Power of Attorney is with the help of an attorney who should know all the legal complexities and particular requirements per your specific situation. There is generally no specific format and procedure of POA. The rules which are common for every POA are,
- It should be in written format as verbal instructions are not reliable and difficult to prove in the time of need.
- The POA must satisfy the required format of the State.
- The POA words must be clear about the Parties such as the Principal and the Agent.
- The POA must be clear about what and how much power has been delegated to the Agent by the Principal.
- Many States’ laws require the POA to be notarized.
- It is not a legal mandate to record the POA, but you can do it to save yourself from future conflicts.
The person who can be your Power of Attorney holder is at the sole discretion of the Principal whom he trusts for his or her demonstrated integrity, loyalty, or judgment. But, as per the Law, they should not be a minor or a person of incapacitation. A person can choose his or her spouse, one or more children, or any family member, or any other person he trusts who will act on his benefit in his absence. It may also happen that the Agents may not be available to fill up your absence and do the required act. So, a person can also appoint co-agents if needed, who will usually have a limited delegated power.
The Principal can delegate all his financial or other powers to his attorney. With some restrictions, he can also delegate a specific power, including Estate Planning. An agent cannot amend the will of the Principal. Still, in certain jurisdictions, it is permitted to the attorney to create or amend trusts for the Principal during his lifetime also, or he can also transfer property created by the Principal, which will eventually affect the distribution of assets as the owner will also change. An attorney can also gift properties if he has that delegated power to save high taxes on estates. Besides the Agreement between the Agent and the Principal, seldom State laws also given the act and the delegated power to the attorney.
The enforcement of the Power of Attorney depends on the State Laws. Some States require POA renewal for continuing validity. But most of the States permit the ‘Durable POA’ to be in force till the Principal dies or revokes. In the Agreement also it can be specified when the POA will expire, such as after a duration or on completion of some act. It may also get terminated if the agreement has a clause on the performance of some specific work by the Agent. It is advisable to review and revise the POA as per the change in time, need, and Laws.
As we approach the later stages of life, we feel the vulnerability of life a bit more than previously. A Health Care Power of Attorney/Proxy will fulfill your wishes when you are not able to express them and take care of your medical and health care wishes. This POA gives the Attorney the power to hire or fire doctors, where you will be treated, who all will have access to your medical records, and fight for you in Court if medical professionals do not honor your wishes. Usually, State law requires notary public, witnesses, or both present when you will be signing the healthcare POA. While signing the document, the Principal should also be of sound mind. The Principal should provide copies of his Health Care Power of Attorney to his doctors and the offices of health care facilities where he often receives treatment, as well as anyone else who should know about his medical wishes. You should also give your health care agent a copy and make sure that they can find the original version if needed.
A Letter of Intent can be a valuable piece in Estate Planning. It is an informal document that gives information about your personal and/or financial matter to your loved ones at your death. This document is not legally binding, nor will it replace the need for the Will or Living Trust. It can only complement those documents which can be changed, as necessary.
A Letter of Intent must have these four basic pieces of information.
- Funeral and Burial Arrangements
- Financial Information
- Digital Information
- Personal Items