07 Apr What Are Some Use Cases of a Power of Attorney?
By: Barry E. Haimo, Esq.
February 9, 2016
What Are Some Use Cases of a Power of Attorney?
When we start to plan for our future, we have to think about what will happen when we can’t make decisions for ourselves. Who will make those important decisions for us? And, more importantly, how can we ensure that those decisions will be carried out? Additionally, there are also situations that can arise where you may need someone else to act on your behalf if you are unavailable to make a decision.
A Power of Attorney is one way to give someone else the legal ability to make decisions for you. It is a document that grants authority from one person to another. The maker of the Power of Attorney (or POA) – also called the “principal” – gives someone else – the “agent” – the power to act on their behalf should a particular situation arise.
What kinds of powers?
Powers That Can Be Given By a Power of Attorney
Depending on why you need or want a Power of Attorney, you can give another person broad power or you can limit it only to specific situations. A POA can be used to authorize another to:
- Access bank accounts
- Sign contracts or legal documents
- Handle banking transactions
- Handle investment transactions
- Create trusts
- Make gifts
- File tax returns
It’s also important to understand what a Power of Attorney is prohibited from doing – even if the Power of Attorney document says the action is allowed. A POA cannot:
- Sign a document that says the principal has knowledge of specific facts
- Vote in an election on the principal’s behalf
- Make or revoke a will for the principal
- Perform personal services that that the principal was hired to do
Agents have a fiduciary duty to act in the best interests of the principal. That being said, if you decide that you need or want a Power of Attorney, make sure that you trust your agent. Whether you choose a spouse, relative, friend, organization, or attorney, your agent should respect your wishes, be concerned about your best interests, and shouldn’t abuse the power you’re giving them.
Situations Where a Power Of Attorney Can Be Useful
Now that you know what a Power of Attorney is and what the agent can and cannot do, let’s look at three situations where having a Power of Attorney can be beneficial.
Incapacitation. A Power of Attorney can be extraordinarily helpful to people suffering from dementia, Alzheimer’s disease, a car accident, or an illness or injury. It will enable your agent to make crucial financial decisions on your behalf until you recover. Some states allow for what’s called a “Springing Power of Attorney”. This means that powers designated in the document are contingent upon your incapacity However, Florida no longer allows a Springing Power of Attorney; it only provides for a Durable Power of Attorney, which takes effect immediately .
Marriage. When you’re married, you and your spouse may jointly own property or bank accounts, which gives both of you certain rights. But just because you’re married, your spouse doesn’t automatically get to make every decision or transaction on your behalf or without your consent. That’s why establishing a Power of Attorney designating your spouse as your agent might be a good idea. In the event you become incapacitated or some other life event occurs that renders you unable to make decisions, your spouse will be readily available and won’t have to wait to be appointed as a guardian.
Military personnel. If you’re in the military, a POA could be especially useful when you’re on deployment. If you become incapacitated, you will want someone to be able to make decisions for you. You may need someone to make property repairs, pay bills, make bank deposits, deal with insurance paperwork, or possibly sell your house. If you aren’t married or don’t have joint assets, a POA will allow your chosen agent to handle these necessary tasks.
A Power of Attorney can be especially helpful in planning for the future. Once you designate a Power of Attorney to someone that you trust, you can rest easy knowing that your affairs will be taken care of and every decision made on your behalf will be made with your best interests at heart. Contact a Florida estate planning attorney today to get started.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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Originally posted 2016-02-09 13:30:38.