A power of attorney, also referred to as a POA, is a legally binding document that grants another individual, known as the agent or attorney-in-fact, the authority to act on your behalf in various legal and financial matters. This can include managing your finances, making healthcare decisions, and handling real estate transactions, among other responsibilities. However, if your existing power of attorney is not properly drafted or is outdated, it could lead to future complications and challenges for you.
Is Your Current Power of Attorney Useless?
Although a power of attorney can be beneficial and valuable, it may not be ideal for protecting your assets in certain situations:
The Type of POA You Have
The power of attorney you select can restrict the agent’s authority to a specific activity, such as real estate sales, or encompass a broader range of responsibilities. This authority can be either permanent or temporary, and you have the flexibility to have the POA come into effect immediately or upon the occurrence of a future event, such as a physical disability.
Consider the following POAs:
- A durable power of attorney for finances is not suitable for managing assets held in a trust
- A non-durable POA is effective until a specific date
- A springing POA only comes into effect if a specified condition is met, such as becoming incapacitated, which provides a more limited scope of authority
As a result, the type of power of attorney you have can be useless for protecting assets, depending on the situation.
The Scope of Authority
A financial power of attorney allows an individual to designate someone to make financial decisions on their behalf. This could include managing bank accounts, paying bills, or handling investments. On the other hand, a special power of attorney is more specific and can be limited to certain actions or tasks, such as selling a particular property or making medical decisions. This scope can also impact how your assets will be protected.
The Source of the Document
If you used a free online power of attorney form to create your current power of attorney, it is important to note that these forms may not cover all types of situations or apply to current laws. That is why consider consulting with an experienced estate planning firm to review these documents. These legal professionals can help you determine if the POA is tailored to your specific needs and includes enough details.
The Agent’s Trustworthiness
If the individual you designate as your agent in a POA is not trustworthy, it can lead to serious legal issues and complications, such as financial mismanagement, exploitation, or abuse of authority. Therefore, it is crucial to consider the reliability and integrity of the person you choose to act on your behalf.
The Age of the Documents
Financial institutions are more receptive to recently updated documents, so reviewing and updating your power of attorney every five years is a good practice to ensure its continued acceptance.
Contact Losavio & DeJean To Learn More About How a Power of Attorney Can Protect Your Assets
At Losavio & DeJean, our team of skilled estate planning lawyers understands that every family has distinct needs and goals. That is why we provide personalized estate planning services tailored to your situation. We collaborate closely with your financial advisors, accountants, and other key figures involved in managing your affairs to ensure that the estate planning services we recommend align with your unique circumstances. Whether you are a business owner seeking to safeguard your assets or aiming to secure your wealth for future generations, our team is dedicated to providing the assistance you need.
To learn more about a power of attorney and how to protect your assets, contact Losavio & DeJean today to speak with our team.