Power of attorney
Conferring Power of Attorney privileges is one of the most important elements of estate planning. This is because it allows a person to authorize another person, that they trust, to act or make decisions on their behalf. In the event that they become incapacitated or are not in a position to act on their own. A principal, also called a grantor, is the person conferring authority, while an agent is the trustee of the principal. Usually a person above 18 years of age. In some cases, the agent can be an attorney-in-fact.
Legally binding agreement
Power of attorney is a legally binding agreement, It is documented and signed by both the principal and the agent. It gives an agent the right to make decisions relating to the principal’s health and financial matters. POA documentation shows the specific sets standards of the agreement and the extent of authority and power that is conveyed to an agent. It also shows in detail, the limitations of the transferred authority and powers. This documentation is only valid after it has been filed with the relevant country or state authorities. After filing, it is subject to review or cancellation by the granter, either orally or in written form, at any time that they deem necessary.
Although it is one of the best ways to safeguard one’s interests, establishing power of attorney is a very delicate endeavor which requires proper understanding of how it works and the different types of POA that exist today. As a principal, it is very important to ensure that the agent that you designate is skilled and capable of effectively executing the power and authority that you confer with them. The agent should be a like-minded person whom you know well, trust and can be relied on to remain loyal and make decisions in your interest.
There are different types of power of attorney that can be used to confer authorities depending on the prerogatives that are to be conveyed or the applications. They include; Durable, Non-durable, Limited, Health Care and Springing POA. They can either be witnessed or unwitnessed, written or in some unique cases, oral. Durable POA gives the agent or attorney-in-fact the authority to make decisions or take actions based on specific directives given by the grantor. The authority is usually conferred in situations that are likely to last for a foreseeable future. It is the most common type used today in situations such as payment of tax, debts, or the collection of income.
Non-durable POA gives the agent authority over only specific types of decisions or financial transactions. Powers are effective only for a short period of time after which they are revoked. This is used in situations such as; when a principal is undergoing treatment or surgery, or when a principal needs some expert help with a situation.
Limited POA is used where a granter authorizes an agent to transfer ownership or sell personal property on their behalf. The permissions are only valid for the transactional period. Health Care and Springing POA fall under the health matters bracket differing only in terms of their uses whereby the former involves assigning authority to an agent to make crucial medical decisions such as the acceptable surgeries or treatment procedures. The latter on the other hand, confers authority to an agent allowing them to release the principal’s medical records or to disclose their medical state.
In conclusion, it is advisable to have an expert legal mind present when you’re establishing power of attorney, mainly because it helps you prevent errors in documentation or filing and also help with its effective execution.
Let the professionals at The Law Offices of Bj Richardson help you find the professional attorney to help you with your specific needs. We don’t handle every aspect of tax law, however, we can direct you to a professional that can handle any area of tax law that we don’t handle.
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