What happens if you become incapacitated? Who can act on your behalf to take care of you and pay your expenses? If you have not made provisions for these events, then a legal guardian, appointed and supervised by the Court, will make these decisions for you. This process causes delay and can be quite costly. These matters can be avoided with a carefully drawn Power of Attorney.
A Power of Attorney permits an individual (your “agent” or “attorney-in-fact”) to act your behalf. This delegation of authority can relate to medical directions and/or financial directions. For purposes of this article, we will focus on the two board types of financial powers of attorney: (i) General Power of Attorney and (ii) Limited Power of Attorney.
A General Power of Attorney, like its name implies, gives your agent the immediate authority to handle your financial affairs with little or no restrictions. These matters could include paying your bills, accessing your bank accounts and managing your investments. Unless specifically drafted otherwise, the authority under a General Power of Attorney ends upon incapacity or death.
For this reason, General Powers of Attorney are often drawn to be “durable,” meaning that your agent can continue to act for you after incapacity, although the authority to act ends at death. In other instances, an individual may recognize the importance of a General Power of Attorney, but may be uncomfortable granting immediate authority to act on his or her behalf. Rather, he or she may desire assistance only upon the happening of a certain event, such as incapacity. As a result, a General Power of Attorney can be drawn as “springing” so that the agent can spring into action only if an individual becomes incapacitated.
A Limited Power of Attorney gives your agent a limited or special authority to perform certain acts for you. Common uses of a Limited Power of Attorney include handling a real estate transaction and addressing tax matters (which are often permitted only with use of an IRS approved form). By their very nature, Limited Powers of Attorney generally end when the action required of your agent is complete.
To be effective, a Power of Attorney should be carefully worded, and you should seek the assistance of an attorney who routinely advises clients on these matters.
By: Joshua Keleske
Posts Tagged ‘General Power Of Attorney’
Using a Power of Attorney For Real Estate Contracts
November 8th, 2009
The use of a Power of Attorney in connection with real estate contracts and be a powerful tool, but care should be taken to avoid potential pitfalls. Here are a few common questions that Arizona real estate lawyers commonly face with regard to the use of the Power of Attorney in the real estate context.
Q. What is a Power of Attorney?
A. A Power of Attorney is simply a signed document that authorizes one person to act on behalf of another. A Power of Attorney is commonly used in Arizona real estate transactions when a party is not available to sign closing documents and wishes to designate another person to sign for them. In such cases, if a Power of Attorney must be used, it should be limited (Referred to as a “Special” or “Limited” Power of Attorney) to the discrete use for which it is intended. In most cases, an Arizona real estate lawyer should be consulted to make sure the Power of Attorney serves only the purpose it was intended for.
Q. Who are the parties to a Power of Attorney?
A. The parties are the principal (who grants the power) and the agent or attorney-in-fact (who gets the power).
Q. What is the scope of the given power?
A. This depends on what the document says. In most cases the principal should avoid a “General” Power of Attorney, which allows the agent to do anything the principal has the power to do. A Special or Limited Power of Attorney (described above), on the other hand, will allow the agent to do only what the principal requires to get the job done.
Q. How long does a Power of Attorney last?
A. Again, this can be controlled by what is stated in the document. If the written document does not specify an expiration date or event, the document generally remains in effect until it is revoked or until the principal dies or becomes incapacitated or incompetent. In most cases, an expiration date should be included in the document because even after a Power of Attorney is revoked it remains effective with regard to third parties who don’t know it has been revoked.
Q. What is a Durable Power of Attorney?
A. In some cases the principal wants the Power of Attorney to survive his or her disability. In such cases a Durable Power of Attorney is used to avoid the automatic revocation of the Power of Attorney upon the principal’s incapacitation or incompetence.
Q. Are there any special requirements for a Power of Attorney in Arizona?
A. Yes. In most cases the Power of Attorney must be signed by a witnesses not related to the principal and must also be notarized. Also, if the agent is to receive any compensation, this must be spelled out and separately initialed by the principal and witness. There are other requirements and harsh penalties, including possible criminal repercussions, so its a good idea to have an Arizona real estate lawyer help.
Q. How should the agent sign a document on behalf of the principal?
A. The agent should sign the principal’s name “by _____ (Agent) as his attorney-in-fact.”
As suggested above, you should be very careful before granting a Power of Attorney to someone else, or before agreeing to act on behalf of someone as their agent. Its always a good idea to seek legal counsel from an experience Arizona real estate lawyer before doing so.
By: Kevin R Harper