Many individuals have heard the term power of attorney or POA for short. However, most do not fully understand what it is and how the document functions. A POA is a document used to give another person the authority to handle some responsibilities on your behalf (limited power of attorney) or all responsibilities on your behalf (general power of attorney). These responsibilities can be anything from signing documents on your behalf to filing tax returns and even transferring funds out of your accounts. As can be imagined, this is not a document to take lightly as the one holding such a document has tremendous authority over some or all important aspects of your life.
However, while this document affords someone significant levels of authority, there are limits to what one can do with a power of attorney. One key limitation is a POA cannot replace a will or trust. Also, the power of attorney extinguishes upon the death of the individual authorizing the POA.
Now, when would a POA be a good idea? Well, if your signature is required for certain items at certain times and you will not be available to sign such documents such as if you need transfer title to a property and you will be out of the country when the property transfer has to occur. Also, if you are very ill and may not be able to handle your own transactions, a power of attorney can oversee your affairs during your condition.
As stated, a POA is not to be taken lightly. It is highly recommended to select someone you trust should the need arise for a POA regardless if the POA is to be limited or have general authority. Also, you should vet the person for any issues even if you know the person. And, of course, once you deem the POA no longer necessary you should immediately and formally revoke the POA.
Have questions regarding a POA and whether it is the appropriate document for you? Give us a call. We can help determine if such a document is the right fit for your needs.