A power of attorney is a legal document where in a person grants another person the authority to act on his or her behalf.
At its most basic, by signing a power of attorney, you are giving someone the authority to act on your behalf.
Obviously, the person needs to be trustworthy and have your best interest at heart. Is it your son? Your daughter? Another relative? A close friend? Whoever you chose should be someone who you know will do the right thing.
Depending on your circumstances, the person with the power of attorney will have to deal with the same people, banks, and institutions that you work with and therefore, it is easier if that person lives fairly close to you.
There are two types of power of attorney that become effective at different times. An immediate power of attorney is effective upon signing (execution). A springing power of attorney becomes effective upon the happening of an event, which is often when a medical doctor considers you incapacitated, such as being in a coma.
There are also two types of power of attorney that designate how much power is given to the selected person. A general power of attorney allows the person you have selected to act on your behalf on all financial matters. A specific power of attorney limits their power to act to a specific matter. For example, you may provide a specific power of attorney in the sale of a house.
There are a lot of questions that an experienced attorney will ask prior to drafting a power of attorney. While you can do it yourself, always remember that you don’t know everything and things might pop up that are best dealt with by an experienced attorney.
As with any legal documents, you should know what you are signing. Be sure to read and understand all of the documents before signing them.
Many people sign a power of attorney and then sign another power of attorney. This can cause two people to be allowed to act on your behalf that might have conflicting notions of what that means. Make sure that you get rid of any prior power of attorney before signing a new one. Also, inform all institutions you deal with that your previous power of attorney has been revoked.
Sometimes people do things they would otherwise not if their finances were better. People sometimes embezzle and intend to pay the money back. Though frequently, despite their good intentions, they are unable to do so. Never select someone who has trouble with finances.
An attorney will discuss with you the “pros” and “cons” of a power of attorney and make sure that you only sign a document that is right for you.
A power of attorney utilized by the right person in the right situation(s) is a very helpful and effective tool. Unfortunately, many people sign a power of attorney without proper guidance from an attorney. This frequently leads to problems. The key is to understand what you are signing and make certain that you have not signed multiple power of attorneys that conflict with one another.
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