Thursday, September 27, 2012

Basics About Power Of Attorney

There are two commonly used power of attorney forms that can be completed to give a person or company authority to act in your behalf, non durable and durable.
If a POA does not include a termination date, the authority of the agent to act on behalf of the principal will immediately end if the principal should become incapacitated or died. A durable POA will continue to remain in effect even if the principal should become incapacitated, but the agent's authority would end if the principal died. A termination date is not usually included in a durable POA because they are often made to protect the individual and their loved ones if the principal should be injured or become severely ill in the future. Another type of durable POA is the springing durable POA, which immediately goes into effect when the principal becomes incapacitated and is no longer capable of handling their affairs. A springing power of attorney is not allowed in some states due to legal issues such as legally determining and or proving that a person is now incapacitated. This may delay the agent from being able to immediately begin making life or death medical or care giving decisions on behalf of the principal and also from managing the principal's affairs in a timely manner.
With both types of power of attorneys, the principal may grant to his or her agent the authority to handle many of their affairs, including but not limited to the following:
  • The buying and selling of personal property.
  • The buying, selling and managing of real property.
  • The disclaiming of interests to avoid estate taxes.
  • Employing professional assistance when needed.
  • Entering into contracts.
  • The entering of safe deposit boxes when necessary.
  • Exercising any stock rights.
  • Filing tax returns.
  • Handling banking transactions.
  • The handling of government benefits.
  • The handling of transactions that involve securities.
  • The maintaining and the operating of all business interests.
  • Making gifts from the estate.
  • Transferring revocable trusts.
  • Purchasing life insurance.
  • Settling any and all claims.
Although a power of attorney form can be a very useful tool, the principal should carefully consider who they choose as their agent when preparing a POA. The document should be very specific about what powers the person will have and the principal may also include instructions to clarify what the agent is supposed to do for the principal. The person named as the agent should be a trusted relative or friend of the principal.
Also, if the form has not been completed and signed properly, it may be refused by a third party as being invalid. If the agent will be buying or selling real property for the principal, the form will also need to be filed with the other documents the agent has signed on behalf of the principal such as a land deed or mortgage.
A POA form can be revoked by tearing it up or by sending the agent a Revocation of Power of Attorney form.

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