What’s a Power of Attorney?
By Barry E. Haimo, Esq.
March 30, 2013
What is a Power of Attorney?
A power of attorney is a document that appoints an attorney-in-fact as your agent to administer your financial and administrative affairs on your behalf. It can appoint multiple agents, either as successors or to serve simultaneously. The powers granted can be as broad or narrow as you wish and last as long as you desire (expiration).
Broadly speaking, for example, you may wish to empower someone to act on your behalf with respect to any and all of your property that you own. Such assets may include cash, bank accounts, stocks, bonds, vehicles, real estate, etc. Such powers may include buying, selling, transferring, lending, mortgaging, gifting, etc. Alternatively, you may wish to more narrowly empower someone to act on your behalf only with respect to selling a particular piece of property in a particular transaction within a particular window of time.
Historically, there were two types of powers of attorney: 1) durable power of attorney; and 2) springing durable power of attorney. A durable power of attorney becomes effective upon execution so it’s important to appoint someone you trust completely.
A springing power of attorney becomes effective only upon incapacity. It has no immediate effect, and the appointed agent has no powers at all until you become incapacitated. Springing powers of attorney offer a safer way to plan ahead. Unfortunately, springing powers of attorney are no longer allowed in Florida.
Want Versus Need
A power of attorney may boil down simply to want versus need. On one hand, you may need it in a variety of situations, most likely in which you are unable to handle your financial and/or administrative affairs. You may be incapacitated either by illness or injury, and that may be temporary or permanent.
In either case, you’re going to need someone you trust to help administer your affairs while you recover. Your trusted advisor or agent will be unable to help you unless and until you execute the proper documentation (i.e. a power of attorney) empowering him/her as such. (Otherwise you can expect to encounter guardianship proceedings where the court appoints someone for you.) You may even appoint multiple agents as co-agents or successor agents.
Use your imagination to consider situations where a loved one has been unable (even for only a short time) to administer his/her own personal affairs, which may include, but are not limited to, paying bills, writing checks, transferring money, selling securities and other property. Not having help can lead to even greater struggles that can be completely avoidable. This document often accompanies a last will and testament, living trust and health care surrogate.
On the other hand, you may simply want a power of attorney out of convenience. Consider a situation where you want to appoint someone to serve as agent on your behalf because it helps you accomplish a particular goal. Perhaps you are out of the country and unable to participate in an important transaction. Maybe you have trouble handling your affairs and just need help making formal transactions.
You can’t be everywhere at the same time. Some institutions will not allow someone just because you consent. It requires formal documentation such as a power of attorney. Some institutions even require their own proprietary power of attorney. As mentioned above, you can limit the purpose and duration of the power, so it can be tremendously helpful.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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