A power of attorney allows someone to designate another person who can make certain decisions for them. It is an important legal document and a necessary part of any comprehensive estate plan. The power of attorney comes in many forms and can be customized for an individual's particular needs. Before executing one, you should talk to an experienced Los Angeles estate planning lawyer. The compassionate attorneys of MacKay & Martin, LLP, are ready to help.
What Is A Power Of Attorney?
The power of attorney lets an individual (known as the principal) appoint someone (known as the attorney-in-fact or agent) who can act on their behalf with respect to personal, business, or legal affairs. When one is in effect, the agent is allowed to make legally binding decisions for the principal. Powers of attorney come in several different forms and can be tailored to meet the specific needs of the principal.
What Are The Different Types Of Powers Of Attorney?
The power of attorney can be broad or narrow in scope. It can be used to handle a specific, one-time task, or it can grant a series of ongoing powers to the agent. The main types of powers of attorney are:
- General. This is a broad power of attorney that grants all of the principal's powers and rights to the agent. In other words, it gives full authority to the agent as if that person were you. It is often used when the principal needs help with financial matters but cannot necessarily be present to take care of them. For example, it may be used when the principal is out of the country and needs someone who can pay bills, conduct bank transactions, and sign documents while they are away. This terminates upon the principal's death or incapacity.
- Limited. As the name implies, the limited power of attorney grants only certain, defined powers and rights to the agent. You may want the agent to handle a real estate transaction, like signing a deed, on a day when you are going to be out of town. But because the power of attorney is limited, the agent could not access your personal bank accounts (unless so authorized). The limited power of attorney usually ends on a specified date or once the designated task is complete.
- Durable. The durable power of attorney may be either general or broad in scope. The difference is that the durable power of attorney survives the principal's incapacity. If you don't have one and become incapacitated, a court has to appoint a conservator or guardian to represent you. The durable power of attorney will stay in effect until the principal either rescinds it or dies.
What Powers May I Grant To The Agent?
These are some powers you can grant your agent using the power of attorney:
- Make bank deposits, withdrawals, and other transactions
- Pay your bills
- Execute stock and bond trades
- Buy or sell property
- File your tax returns
- Negotiate and sign contracts
- Hire people to care for you
- Apply for benefits such as Supplemental Security Income
You can also limit the scope of these tasks. For example, you may want your agent to have access to one bank account but not another. Every individual's needs are different, so discuss with an estate planning attorney how best to draft your own.
What Limits Are There?
Besides the type you use, and the scope of the powers it grants, there are other restrictions on what your agent can do. For instance, the agent cannot make or change your will. The agent also cannot make gifts to him- or herself from your money unless you specifically authorize it (even then, there may be restrictions to this). More generally, the agent has to act in your best interests.
Once the power of attorney is in effect, you can still make decisions on your own. In other words, this does not deprive you of rights, it only grants someone else the authority to exercise them. You can decide whether the power of attorney goes into effect immediately or only upon your incapacity.
Who Should Serve As My Agent?
Despite the limitations imposed on the agent either by the power of attorney or by law, you want to choose someone who is trustworthy. Remember, this individual may have the power to access your bank accounts, sign contracts, execute real estate transactions, and more. Take the time to decide who should be entrusted with this privilege.
Some principals wish to appoint two or more agents who can make decisions together. You can also appoint alternate agents who can step in if the first agent is unable or unwilling to serve. Talk to a knowledgeable estate planning attorney for guidance on choosing your agent(s).
Can A Power Of Attorney Be Revoked?
A power of attorney may be revoked as long as you have the capacity to do so. Perhaps the situation that gave rise to the need for one has ended. Or, you no longer trust the agent(s) you've appointed. Revoking a power of attorney is fairly straightforward, but be sure to consult an attorney for assistance. There are also limited situations in which a court may revoke one, such as evidence of fraud or the principal's incapacity at the time the document was executed.
Contact MacKay & Martin Today
Any decision concerning a power of attorney should be made carefully and with the input of an experienced lawyer. MacKay & Martin, LLP, is here to guide you through this important step in the estate planning process. Call us today to learn more.