In the event that you become incapacitated, a Power of Attorney is a legal document that acknowledges that you’d like another person to act for you. It specificies someone to represent you in business, legal, and personal affairs. When you create this document with someone that you trust, you’re known as the principal and the person is known as the agent.
Why Create a Power of Attorney Document?
Signing a Power of Attorney document helps in specifying the different powers and authority that you are giving to your agent. It’s a how-to guide for ensuring that you, your assets, and your family members are still taken care of even in the event you can no longer act on your own behalf.
Are There Any Requirements for Those Signing?
To be a principal, you must be an adult (over the age of 18 in most states) and competent at the time of creating the legal document. You must be mentally capable of making your own decisions at this time. You can imagine that this is important considering the significant power that will be signed over to your chosen agent.
The person you appoint to act on your behalf is known as an agent or an attorney-in-fact (the terminology really just depends on your state) can be anyone that you choose. They must also be an adult (over the age of 18 in most states), have never filed for bankruptcy, and are not employed at or own any kind of elder-care or extended-care facility that you are living in.
Your agent may also be the executor of your will, should you so choose. With all of this potential power, it is important that you choose someone you trust to be named as your agent or attorney-in-fact.
What do agents (otherwise known as the attorney-in-fact) do?
Act on your behalf legally:
A Power of Attorney lets your agent handle legal matters on your behalf–They are able to communicate with your lawyers, file court documents, and act on your behalf during proceedings.
Act on your behalf financially:
An agent can act on your behalf and make financial decisions should you become unable to do so. They can control your bank account, cash checks, and transfer funds.
Manage your business:
If you’re a business owner, your agent can act in your stead during meetings, manage your business, vote as a shareholder, make budgetary and employment decisions.
Manage your real estate:
Your agent can sell, rent, trade, and manage any of the properties owned or rented in your name.
Agents can have other powers as well including:
- Handling household expenses
- Handling your taxes
- Selling or purchasing material goods
- Gifting money
- Managing your living trust
- Donating to charities.
It all depends on the parameters that you set forth for your agent. If you choose to grant your agent general power of attorney, that means they can act for you in any capacity. If you grant specific power of attorney, your expectations for their involvement is clear.
Looking for advice about estate planning? Contact an estate planning lawyer Memphis, TN trusts to start the process and get help drafting up a Power of Attorney.
Thank you to our friends and contributors at Patterson Bray for their insight into estate planning and power of attorney.