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 ‘Limited Power’
Understanding Powers of Attorney
November 22nd, 2009Posted in Article
Tags: Acts Bank Accounts Decisions Delegation Of Authority Directions Financial Affairs General Power Of Attorney Incapacity Instances Investments Legal Guardian Limited Power Power Attorney Power Of Attorney Powers Of Attorney Provisions Real Estate Transaction Reason Special Authority Tax Matters
A Power of Attorney is No Cure-All
November 16th, 2009
A power of attorney means peace of mind to a lot of people. What they don’t know is that there are several different types of powers of attorney and if you don’t have the right one it can put you and/or your family at significant risk depending upon your particular set of circumstances. An attorney can give you the details of each type of power of attorney and how they work in your state but here’s a quick description of the three most common.
The Most Common Powers of Attorney
• The Universal Power of Attorney allows one or more people to act on your behalf for any reason at any time.
• The Limited Power of Attorney specifies under what set of circumstances or during what period of time someone is allowed to act on your behalf for certain activities. As an example, it can give someone the authority to act on your behalf for all of your financial affairs in the event of your illness or incapacitation.
• The Specific Power of Attorney usually gives someone authorization to act on your behalf for one specific undertaking like authorizing someone else to sign the closing documents when you buy or sell a house.
Beware of the Universal Power of Attorney
So, why is it important for you to know what types of powers of attorney there are and the benefits and risks of each? The answer is that most of us use only the Universal Power of Attorney; thinking that we are protecting ourselves because we lack the awareness of all of the available options. Many people don’t realize a Universal Power of Attorney gives nearly unlimited power to the holder of this document. It gives that person the legal ability to at any time and for any reason access your medical records; withdraw funds from your bank or investment accounts; sign a contract in your name to buy or sell securities, real estate, an automobile or boat; take out a loan and on and on.
Limited Power of Attorney
A Limited Power of Attorney is an option for designated activities that kicks in only in the event of illness or incapacitation (which is valid as long as a doctor continues to certify the illness or incapacitation) or during a specific span of time. These limits reduce your exposure to possible excesses or bad judgments by those who hold your limited power of attorney.
Using Different Powers of Attorney for Maximum Flexibility
Another thing to consider when designing a legal backup system that will come to your aid when the unexpected happens is whether it is a good idea to overburden any one person with all of the responsibilities of keeping your life afloat until you are able to once again take control of it yourself. The person best suited to oversee your financial and small business matters may not be the best person to care for your pets, children or household. Consider that it would be overwhelming for one person to have to take care of all facets of someone else’s life for any period of time. Making separate authorizations naming several different friends or family members to undertake the various responsibilities of your life protects you more thoroughly.
Knowledge is Power
It is equally important that you provide those you have entrusted to act on your behalf in times of emergency or crisis with the information and instructions necessary for them to know how to help you. So, no matter how many authorizations or powers of attorney you may have put into place, you need to make sure that those who hold your powers of attorney know what you want and expect – from your business needs to the running of your household. If you don’t do this, it would be like hiring a builder but not giving him the plans for the house you want to build.
This process sounds daunting but it can actually be very easy and inexpensive with resources like those offered at www.livingsmartguides.com Whatever tools you select to enable others to give you the help you need in a crunch, don’t delay putting these protections into place so you’re better prepared for whatever lies ahead.
By: Deborah Dillon
Posted in Article
Tags: Act Automobile Financial Affairs Investment Accounts Legal Ability Limited Power Medical Records Options Peace Of Mind Period Of Time Power Of Attorney Powers Of Attorney Real Estate Risk Set Of Circumstances Several Different Types Specific Power Of Attorney Undertaking Universal Power Unlimited Power
Limited Power of Attorney
November 8th, 2009
Through a limited Power of Attorney, the “principal” can authorize another person, i.e. “agent”, to carry out specified tasks on his or her behalf for limited time duration or only under certain circumstances. The Power of Attorney is therefore “limited” or tailored to meet the needs of a particular transaction or set of transactions (i.e., “the purchase of the real estate in Los Angeles, known as 123 Oak Street”) and comprehensively details the expiration date and full extent of the power. Most people choose a limited Power of Attorney because with this form, the principal can give someone the power to manage his or her finances or property and yet rest easy knowing his or her assets are protected.
A limited Power of Attorney usually reads: “My named attorney-in-fact [or agent] shall have full power and authority to undertake, commit and perform only the following acts on my behalf to the same extent as if I had done so personally; all with full power of substitution and revocation in the presence. Describe the specific authority below: …” The “specific authority” could be property transactions, banking, specified business operations, access to safe deposit boxes, litigation, etc.
Without this restriction, sometimes rigid banks, financial institutions or others to whom it is presented might not accept the Power of Attorney. Thus, if the principal plans to use a stand-in for a financial, real estate or business transaction, he or she must ensure in advance that the other parties have approved the Power of Attorney in question.
Unless revoked, a limited Power of Attorney usually ends at a specified time, unless the principal becomes incapacitated or passes away.
By: Kent Pinkerton
Posted in Article
Tags: Acts Assets Banks Financial Institutions Business Operations Business Transaction Circumstances Duration Expiration Date Full Extent Limited Power Limited Time Litigation Pinkerton Power Of Attorney Property Transactions Restriction Revocation Safe Deposit Boxes Specific Authority Time Duration