Wednesday, December 19, 2012

Frequently Asked Questions About Power of Attorney

What is a Power of Attorney?
A Power of Attorney is a document that helps you deal with the issue of managing your finances when you are unable to do so, for example, if you become mentally incompetent. Alternative exist, such as living trust, but this is the most common way of handling this life situation.
How do I choose my Power of Attorney agent?
Pick someone who you really trust. They can be either a close relative or someone you have known for a long time. Don't trust your affairs to anyone who you think might not follow your wishes. If you choose an attorney or accountant as your agent, there is usually a fee. Family members will usually perform agent duties for free. Choose someone with financial smarts - your financial affairs will probably be better managed by someone who manages their own financial affairs carefully and effectively. Discuss the issue with your potential agent first and express your values and wishes with regard to how your affairs should be handled. This also gives the agent an opportunity to consider and communicate to you whether he or she is willing and able to handle the responsibilities.
What if my agent doesn't act in my best interests or follow my wishes?
A number of agent provisions are included. These provisions clarify issues related to how the agent handles your affairs including: accounting of the agent's actions, compensation and misconduct.
Am I allowed to change my agent?
You may change your mind about the agent you selected. You can revoke a signed POA document at any time, regardless of the reason. If you are unsure about the person you selected as your agent, you may choose to revoke the POA and select a different agent. This should be done in writing should using a Revocation of Power of Attorney document, and you must provide notice to the agent under the POA that you are revoking.
What different types of Powers of Attorney exist?
General: Your agent will have very broad authority to manage your financial and personal affairs. Your agent will have the legal authority to make gifts, operate a business, grant a disclaimer power, make living trust transfers and handle a personal residence.
Health Care: If you employ this type of document, another person you legally authorize will be able to make decisions about your medical care when you unable to.
Special: With this type of document, your agent will have powers limited to the specific areas you designate. For example, you might designate only the ability to access your safety deposit box or to manage your checking account.
Durable: A "durable" POA is effective even if you become mentally incompetent. Some states allow you to make your document "durable".

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