Monday, November 7, 2011

Most Common Uses of Special Power of Attorney

A special power of attorney becomes necessary in situations that require legal authorization to act as an agent for another person. This could be to authorize someone to handle banking transactions, business affairs, sell real estate or motor vehicles, or grant permission to a caregiver to obtain medical care for minor children.

Essentially, a special power of attorney can be written up for nearly any kind of transaction people perform. Privileges can be given to engage in real estate transactions; open or close bank accounts or transfer funds between accounts; manage financial investments; buy, sell, or trade business equipment and assets; or act as an agent to enter into negotiations with government organizations like the Internal Revenue Service.

Government bureaucracies, banks, and medical professionals cannot discuss information pertaining to you or your assets without written authorization. Nor, can a person enter into financial arrangements or make medical decisions without the appropriate power of attorney form.

It is advisable to have an attorney write up special power of attorney documents to ensure they contain appropriate legalese and are recorded through courts, if necessary. However, people can write their own POA documents using preformatted templates that only require filling in the blanks. At minimum, it's a good idea to have lawyers review self-written forms to make certain they will be valid in a court of law.

Each POA form includes the name of the person executing the document, known as the 'Principal' and the person authorized to act as the 'Agent' or 'Attorney-in-Fact.' The latter term sometimes confuses people because they assume it refers to a lawyer. However, agents do not have to be lawyers or have any connection to the legal field.

One of the more common uses of special POA documents is to authorize agents to conduct real estate transactions. Investors use this form to permit realtors to buy or sell investment properties. They also use this document to grant property management groups the right to manage rental properties and collect rent monies.

Another use of real estate POA is when homeowners need to authorize construction companies to purchase materials to build or renovate their home. Lastly, this form can be used to transfer real estate utilizing 1031 exchanges.

Business owners need to establish special power of attorney to authorize agents to conduct certain types of business transactions. These could include buying, selling, or trading business assets, business notes, or real estate, as well as taking part in joint ventures with partners.

Individuals that need others to manage investment accounts will have to setup power of attorney forms. Privileges can include: making deposits and withdrawals into investment accounts; managing mutual funds, Keogh's, and IRA's; or working with investment firms and stock brokers.

Taxpayers that owe the IRS back taxes and hire an organization to negotiate for them will have to assign POA privileges. These powers can authorize agents to respond to IRS notices; prepare tax returns; acquire 4506 tax forms; or work with the IRS to lessen outstanding balances or setup a payment plan.

Last, but not least, special power of attorney is frequently utilized with estate planning methods to grant privileges for engaging in proceedings related to estate settlement. It is best to speak to an estate planner or probate lawyer to ensure proper forms are filed.

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