What is a Power of Attorney?
A Power of Attorney is a document that lets you appoint someone to represent you.
If you sign a Power of Attorney, you are the principal. The person you appoint to represent you is called the agent or attorney-in-fact. One of the clear benefits of having a Durable Power of Attorney for Finances is that it can save your family thousands of dollars in avoidable costs!
How can a Power of Attorney help me?
A Power of Attorney lets you authorize someone to handle a specific task, like signing documents for you while you are away. For example, your agent can sign sale documents or contracts for the purchase of a house, or to sell your car. Or, your Power of Attorney can authorize your agent to handle on-going tasks.
Here are examples of tasks you can have your agent do:
- make bank deposits, withdrawals or other transactions
- trade stocks and bonds
- pay your bills
- buy or sell property
- hire people to take care of you
- file your tax returns
- arrange the distribution of retirement benefits
- negotiate and sign contracts
- apply for benefits like SSI or Medi-Cal
Your agent can do almost anything the Power of Attorney permits and you can also limit the kinds of financial decisions you want your agent to be able to make.
What is a Durable Power of Attorney for Asset Management?
Durable means that it is still effective you become incapacitated and can not think well nor manage your own finances or can not manage your own assets.
A normal Power of Attorney is void if the person becomes incapacitated or cognitively impaired.
If you do not have the DPOA and become incapacitated, then you family would need to start a court case called a Conservatorship. Then the court will require the Conservator to file reports, go to hearings, prepare court account and you will never be free from court supervision until you recover your mental abilities or pass away. A Conservatorship is not necessary for a person that has a Durable Power of Attorney for Financial Management. Your family will think it is a minor miracle if you become incapacitated and have a DPOA.
Can my agent write or change my Will or use my assets?
No! Your agent can establish a trust, but cannot make or change your Will (Probate Code Section 4264 ). Also, unless you specifically make a gift to him or her, it is against the law for your agent to make gifts to him or herself. If you are 65 or older, and your agent takes your property without authorization, s/he can be charged with elder abuse. Always keep in mind that it is extremely important to choose someone who you trust completely!
How can I be sure my Power of Attorney is valid?
You must sign the Power of Attorney. You can ask someone to sign for you, but you have to watch him or her do it.
The document must be acknowledged by a notary public or signed by at least 2 adult witnesses. An agent cannot be a witness. If you want the Power of Attorney to be durable, it must say either: “This Power of Attorney shall not be affected by subsequent incapacity of the principal”, or “This Power of Attorney shall become effective upon the incapacity of the principal”, or similar words that show you want the document to be valid even if you become incapacitated.
Durable Powers of Attorney for Asset Management FAQ
It is safe if the person you appoint is trustworthy and competent.Be careful to appoint someone you trust completely. That person may be able to access your bank accounts, sell your house, buy and sell stock in your name, cancel your insurance, or perform other important and sensitive transactions.
Yes. You can make all the financial decisions you used to before you had a Power of Attorney.
Yes, your agent can.
You decide when it goes into effect.You can make it go into effect immediately (when you have all the needed signatures), or only if you lose the ability to make financial decisions. The choice is yours and will be based on whatever you ultimately decide to do.
You can decide if you want your Power of Attorney to expire on a certain date, or after your agent does a specific task.Your Power of Attorney can also be durable. This means it will last either until you cancel it or until you die. Some institutions, like banks, have their own Power of Attorney forms.
First, decide exactly what powers you want to give to your agent.Then, ask yourself if you trust that person. Are there alternatives to a Power of Attorney? Next, ask a lawyer for advice, or read about Powers of Attorney so you will understand what you are doing before you sign anything.
