A financial power of attorney is a legal document drawn up by a person who gives a trusted family member, friend or other person the right to make their financial decisions for them if they cannot do it themselves. This document is typically drawn up by someone who is preparing for the future. He or she may become sick or incapacitated. If this occurs and this person cannot conduct business himself, the finances will be cared for. The person who draws up this legal document is called the principal, the person who is given the legal authority to make financial decisions is referred to as the agent. This document can be found online or can be obtained from a lawyer. If a lawyer draws up the financial power of attorney, a fee will be charged. Otherwise it costs nothing. This document must be notarized, copied and filed in a safe place. If the principal so chooses he may give it to banks and his licensed physician, in addition to the agent. The county clerk’s office does not need to keep a copy on file.
Two Types Of Financial Power Of Attorney
There are two types of financial powers of attorney. A durable power of attorney is used when the principal has a chronic illness and foresees a point in time when they are
unable to make financial decisions. A non-durable power of attorney is used for limited transactions such as check cashing, paying bills or making a change in an investment. A durable power of attorney is no longer valid when the principal passes away, when the principal chooses to terminate the document for any reason, or if the agent becomes unable to perform this duty for the principal. A non-durable power of attorney is no longer valid when the principal passes away. This document is valid in other states although each state’s laws are different. It also does not apply to third parties.
It is wise that the principal assign more than one person as their financial power of attorney. This is done as a precautionary measure if something should happen to the primary agent and they cannot perform their duties. The principal may find the primary agent to be acting in an unsatisfactory manner. It is the principal’s legal right to revoke the position of this person by writing a letter to the agent and mail copies to him, to the bank and the physician. If a lawyer drew up the document, then he or she should be notified. If the agent is suspected of stealing the principal’s funds and the principal is medically incapacitated, a written complaint can be sent to the court, the principal’s lawyer should be called or Adult Protective Services should be contacted. The court will take action and instruct the agent to return all funds to the principal. Other reasons to revoke this document would be in case of a divorce or legal separation, or if there has been a general falling out in the relationship.
Financial Power Of Attorney And Medical Power Of Attorney
It is recommended that this person not make medical decisions. A separate document called a medical power of attorney should be drawn up to appoint an agent for medical decisions. Often the term “springing” financial power of attorney is used to note the agent’s position if the principal becomes incapacitated. The agent “springs” into place and makes financial decisions for the principal, acting only as the principal would in regard to his finances. A limited power of attorney gives the agent the legal authority to make only certain financial decisions, but not all. The agent would be instructed to only cash checks or pay bills, but would not be in charge of all financial decisions. The agent must carry out all instructions of the principal to the best of his ability. The principal should list all finances, attach it to the document and give it to the agent to keep in a safe place. The agent should not combine his or her finances with the principals. If the agent is paid for his services this should be clearly stated in the document. The agent is called a fiduciary and should act in the highest degree of faith while performing the role of the financial power of attorney.
Take a look at this YouTube video which gives a short overview of the financial power of attorney.
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