Finances
In the event that you should be unavailable or indisposed your agent will be in charge of handling all your financial affairs on your behalf. An example of some of the things your attorney in fact will do for you (the principle) is access you bank accounts so as to be able to pay your bills and handling other transactions, buy and sell property and other assets and conduct business on your behalf. General power of attorney gives you peace of mind in that should you be physically or mentally unable to carry out your financial obligations every day things like paying your car note, you mortgage and your hospital bills will be handled by the person you choose to appoint.

Health
General power of attorney also gives the agent you appoint the permission to make medical decisions on your behalf should you be unable to do so. Without an agent to make crucial arrangements for you a court of law will decide for you who is fit to carry out your wishes. Designating someone as your agent ensures that the person making decisions should you be unconscious or comatose will be someone you trust to act in your best interests. The decision making powers of the agent should be stated clearly in the general power of attorney contract or it will be considered invalid by a court of law.

Taxes
The individual or organization you give your general power of attorney to can also file taxes on your behalf. This is applicable whatever the reason for your absence – whether you are traveling out of state, out of the country or are just physically and/or mentally unable to file your taxes. This guarantees that you will not pay any fines or have any of your assets seized for non payment as the agent can file taxes for you and handle any legal matters that may arise later on.

Legal Representation
Other situations in which an agent can act on your behalf can be in circumstances where you may need to enter in to a contract of some sort. This is especially helpful if you run as a business as you want things to run smoothly even in your absence. They can settle debts on your behalf, settle claims and enter safety deposit boxes for you. They will be your representative in all matters legal so it is imperative that you choose someone that you trust and who is aware of your preferences and wishes and will carry them out for you when you are unable to.

The above is just a brief overview of instances in which general power of attorney is useful and beneficial to the agent. As always, it is recommended that you consult an attorney so that you may discuss the pros and cons and carefully go over the details of the contract before you choose your agent.

-Age- It is a basic factor in determining whether someone is fit to become your attorney-in-fact. You must choose a person who is a lot younger than you are since he or she can carry out the responsibilities for a longer time compared to the older ones. Also, younger people are relatively healthier than their older counterparts, so you can be sure that they can handle your assets without much hassle.

-The person who can do the duties- Typically, elderly people appoint their eldest child as their agent. But how can you be so sure that your child will be able to perform all the responsibilities? If you have more than one child, it would be wise to divide the POA among the children who can handle the duties you require. Also, it helps to assess your children to determine which ones can decide according to your best interest or your wishes. That means going for someone who will manage your finances and personal matters just as you would have.

-Trust- Your level of trust matters a lot when deciding whom you will authorize to make important decisions on your behalf. Ideally, this person should be someone whom you trust your life with.

-Comfort- The person you will choose to be your agent must be someone who you are comfortable dealing with. On the process of drafting the power-of-attorney document, you will have to discuss all the terms in it, and it is important that the agent won’t be too much of a headache for you.

-Amount of control- How much authority are you willing to grant to your agent in terms of decision-making and performing your tasks on your behalf? That is a crucial decision you need to address when selecting the right attorney-in-fact. You may opt for several limited powers of attorney if you are not comfortable with the idea of giving your agent full control over your assets and personal matters. Limited powers of attorney assign particular tasks to an attorney-in-fact. You may even opt to set a specific period for the authorization to take effect.

-Legal requirements- A person must meet certain requirements according to the laws in your state. One of the requirements in most states is that an agent should be of sound mind to be able to make the right decisions when it comes to the finances, properties, or health of his or her principal.

Creating a power of attorney gives you an assurance that nothing will go wrong with your assets and finances and that your wishes will be carried out just as you planned. Part of that peace of mind comes from choosing the best person who will serve as your attorney-in-fact.

The durable power of attorney is called such, since the attorney-in-fact would continue to have authority and act on behalf of the principal, even if the principal becomes incapacitated. Though the durable power of attorney has such characteristic, it is still important for the document to state that it would remain valid even if the principal becomes incapacitated or disabled.

The durable power of attorney can be useful in situations when the principal is seriously ill, disabled, and if their property is modest but do not need setting up fund trusts or guardianship. This is also favourable for married couples whose account is joined.

The durable power of attorney is also referred to as the health care power of attorney. In many situations, the health care power of attorney is different from the agent who would oversee financial and business matters. The attorney-in-fact who is given the durable power of attorney is required to make decisions related to the principal’s health like stopping life support or performing surgery.

Laws on how the power of attorney should be created are different on each state. For example, in South Carolina, the preparation for the power of attorney is the same as preparing for a will. In California, notarization in the documents is important but this may not be the case in some states. This is why it is important to have knowledge on legal matters and employ legal assistance when making the document.

A possible problem with the durable power of attorney is that the principal may not want the attorney-in-fact to take specific liberties. The principal could specify in the document what specific decisions the durable power of attorney can make. Aside from that, the document could specify that the durable power of attorney could take effect in the event the principal becomes disabled.

The durable power of attorney could cover different decisions and responsibilities, aside from health care decisions, like:

- Providing gifts which can play a major part in estate tax planning.
- Accessing safe-deposit boxes.
- Signing tax returns, IRS documents, and settling tax disputes.
- Pursuing legal matters or litigation on behalf of the principal.
- Collecting benefits from health and other insurances on behalf of the principal.
- Setting up or amending trust funds.
- Revoking the power of attorney.

Laws covering the power of attorney vary in each state. For example, if the attorney-in-fact is the spouse and they get a divorce, the power of attorney is terminated. The court may also rule the document to be invalid, especially if the principal is proven to be incompetent when the document was signed. The principal could also revoke it, as long as he is mentally sound.

The power of attorney could also be terminated if the attorney-in-fact becomes incompetent, unavailable or dies. To avoid problems, the principal could identify an alternate attorney-in-fact and state it in the document. Make sure to identify the situations when the alternate would take responsibility.

There are several frequently asked questions about this subject. It would be wise to be more familiar about power of attorney to fully understand how it could be of best use for you.

Do I need to appoint a lawyer as an agent?

The agent is also usually called the attorney-in-fact. You could appoint a lawyer as your agent. However, it is not a requirement. In fact, you could appoint just about anyone (in legal age) as your attorney-in-fact. The appointment and authorization should be clearly stated in the legal document (a power of attorney is actually a legally effective document).

How is the power of attorney created?

You need to completely fill out a specific power of attorney form. It should state yourself as the principal and identify the agent you are appointing to take authority on your affairs if you become unable to do so. Of course, it is a requirement that your appointed agent agree to take the authority you are giving. The document should be duly witnessed by a lawyer or a notary public. For the durable power of attorney, you should seek guidance from your private lawyer when doing the provisions or content of the document.

Is it possible to make a power of attorney if I get mentally incapacitated?

It is not in any way possible to do so. As mentioned, there is a requirement by law for you to fully understand what you are getting into for the document to take full effect. It is advisable that you make a power of attorney even if you do not feel any illness or you do not expect any event that would incapacitate your mental state. It is always ideal to be prepared.

Could the power of attorney be revoked?

Of course, it could be revoked especially if you are no longer comfortable about the kind of service or performance your agent is giving you. Be reminded that it is your right to revoke any authority you provide a person through a power of attorney anytime. You should accomplish a revocation form and distribute copies to all institutions and agencies that could be concerned with transactions, including hospitals and banks. Your agent should also formally receive a copy of that revocation.

As for the durable power of attorney, you could do two actions. First, you could get into a new durable power of attorney to name a new person as your attorney-in-fact or agent. Second, you could decide to handle all your own affairs.

The agent you would designate for your power of attorney would assume specific responsibilities and duties. Most importantly, the person should always act for your best interest. By this, it means that the agent you are appointing should always intend to follow your instructions. He or she should be ‘fiduciary.’ Thus, that person must always act with the highest possible degree of good faith on your behalf.

Your agent still has the freedom to do whatever he/she likes to do even if he/she is supposed to always make decisions for you. The law mandates the person to use your money and assets only to uphold your benefit. But he/she could freely make several inappropriate acts with regards to your money. That is why it very important to choose and appoint a person whom you fully trust. You should not appoint just about anyone. Before you choose an agent of an attorney-in-fact for your special power of attorney, it would be best to ask yourself the following questions first.

Do you trust the person?

The best thing you should establish is trust on the person you are appointing as an agent. Unfortunately, trust is something earned over time. You have to make sure the person you choose is trustworthy.

Does the person truly understand your feelings?

He/She should know you well so as to understand your own points of view and opinions. If you think that person really understands your feelings, you could be sure he/she would follow and stick to your personal wishes if ever you get incapacitated.

Would the person be willing to spend time to handle your affairs?

We are all busy. Perhaps, the person you are appointing as your attorney-in-fact could be busier than you are. It is important that the person be able to spend much time to handle your affairs and work on your behalf. If not, you would be in trouble.

Is the person easily available?

Appoint an agent or attorney-in-fact who is easily accessible or available. This is to make sure he/she would always be there in cases of emergency. The person need not be personally present to attend to your errands all the time but at least he/she should be easily contacted through the phone.

Does the person know about handling finances?

You are entrusting your money and assets to the person. It is important that you appoint an agent who is well skilled and knowledgeable in handling and managing finances. If he/she is not, at least he/she should be willing to seek appropriate help from the experts. Your power of attorney would give the person the authority to handle your financial affairs. Make sure you are entrusting it to a prudent and wise person.

A lot of people have wrong notions about powers of attorney. They think that only the elderly as well as those with massive assets are only the ones who must draft power-of-attorney forms. However, the need for POA is not limited only to these groups. Even younger people and those who have only a few assets may create powers of attorney. A POA suits people who want to have the peace of mind knowing that someone they trust will act on their behalf regarding financial or health care matters when they are no longer able to do so.

It is impossible to underestimate the importance of POA. This legal document comes in handy when you incur an injury or develop a life-threatening disease, both of which render you incapable of making decisions on your own. In case you become physically or mentally incapacitated, how could you possibly pay your bills and mortgages or conduct transactions at the bank? Imagine your home getting foreclosed because you are physically unable to pay off your home loan while you were undergoing medical treatment in a hospital. If you do not have an attorney-in-fact, you might get into trouble with the law.

You don’t want that to happen, right? So it is a wise move to have someone take care of your properties while you are away.

What will happen if you don’t have an attorney-in-fact and you are incapable of acting or deciding for your affairs? The court will then use its discretion in deciding who will be in charge of making decisions regarding your finances, properties, or health care. A judge will choose a person who will serve as your legal representative, and this agent may be someone who you do not fully trust. If you want to have a say on who will take care of your affairs when you become incapable of doing so, then it makes perfect sense to create a power-of-attorney document.

When is the best time to get a power of attorney? The answer is simple: now. It is because a POA is designed to protect yourself and your assets when the unexpected happens such as a debilitating illness or a serious injury. Thus, you will never know when a POA becomes necessary. Having said that, it pays to create it as soon as you can so that you avoid the conflicts or hassles that might arise should crucial decision-making has to be made and you are unable to do it.

The lack of an appointed person to take care of the legal matters when one is dying often becomes a problem because no one anticipates this happening. And who can blame them? Nobody would want to go morbid and prepare for something like dying from an illness. Death is easier because the will (as in the last will and testament) will take care of the legal matters post-mortem but dying is another thing altogether. This is especially true with people who are gravely injured and cannot make decisions for themselves like for instance when they are under comatose or when they cannot speak, move or are invalid.

Power of attorney is one of the ways that you can appoint a representative for you should something happen to you. Although power of attorneys are often given for a specific period of time, some principals, or those who are giving the power of attorney, can extend the contract until something happens to them like when they become terminally ill or when they become gravely injured. This however should be plainly stated on the contract for the power of attorney. Otherwise, it will be deemed invalid by the court.

The principal can also choose to appoint an agent or the attorney in fact (the person to whom the power of attorney is given to) to be his or her representative when they become ill. Some, in fact, appoint people to act on their stead while they are in the hospital and to make any medical decisions in their stead like when they need to pull the plug in case of a comatose. This is what is often called the ‘Health Care Power of Attorney,’ which empowers the attorney in fact to make health care decisions for the principal or the grantor, even something as sensitive as terminating the hospital care in cases when machines are the only one keeping them alive.

It includes the power to give consent or to refuse a medical procedure for the grantor. In some states like in New York, this is a requirement. A separate document is needed as stated by the Health Care Proxy Law by the State of New York, appointing your health care agent so to speak. Medical hospitals will not honor the provisions stated in the living will. It can state the medical wishes of the person but it does not appoint anyone from making the decisions for them.

For people with mental illness, they can prepare the Psychiatric Advance Directives or PADs, which grants the proxy to dictate psychiatric care for the patient as they cannot make the decisions for themselves with regards to their wellbeing.

What is a power of attorney?

Before we can discuss the advantages and disadvantages of using a power of attorney, you must first understand that exactly is the concept. Power of attorney is a document that gives people the authority to act on another person’s behalf for a specific period and matter depending on what is stated on the paper. This means that another person can sign documents for you and make decisions on your behalf. The person who gives the power of attorney is often called the principal while the grantee is called the proxy or sometimes the agent.

Use of the Power of Attorney

Power of attorney is used within corporations where executives have tightly packed schedules that require them to travel in three different countries in a span of three days. This can either be physically impossible or at best, physically tiring. Thus, the power of attorney serves to lift the burden from the executives, allowing them to become more productive. Company lawyers are often sent or subordinates who are trusted to make decisions and sign the contract.

Another advantage of a power of attorney is its importance in making healthcare decisions. A power of attorney can also be given to people, authorizing them to refuse or allow medical care to the principal if they become incapable of making decisions for themselves. This also includes making the decision to pull the plug in cases when only a machine is keeping the principal alive.

Some people are also given the power of attorney to take care of a principal’s financial portfolio. Although this is well and good especially when you are so busy and want to put the business of investing your money to a professional. But money can turn people dishonest. And here lies the one disadvantage of a power of attorney’ putting your trust into one person.

On the downside

Remember that in giving a power of attorney to someone, you are basically telling people who read the document or the contract that you are giving the agent full rights to sign for you and agree or refuse something on your behalf. If the agent turns out to be corrupt, then any transactions that he or she handles is at risk for fraud. This is why although this is a very convenient thing to do; only a few ever use it. Giving that kind of power to one person can be very risky even if you plan to monitor all the transactions made under your name.

1. Gather all the forms you will use as models for your document. Over the Internet, you can find websites that specialize in legal forms. These sites may allow you to download their power-of-attorney forms.

2. Decide which type of POA you need. Your general options are the general and limited powers of attorney. The first type grants an attorney-in-fact an unlimited control over your finances or health care without a predetermined period. In contrast, the second type is limited to only a certain kind of financial responsibility.

3. Be wary of the risks involved in granting another person the power to manage your finances. Remember, by creating a POA, you authorize your agent to use your name in carrying out his or her tasks such as preparing and filing tax returns, borrowing money from the bank, and collecting your social security benefits. With a POA in his or her hands, your agent can make financial, health care, and other legal decisions on your behalf. That being said, you must educate yourself about the risks as well as the responsibilities involved with a POA before you start the paperwork.

4. Start writing the document. List all the reasons and the scope for granting POA to your agent. You will need these details when you consult with a lawyer who will decide the right type of POA to use in your case.

5. Include all your assets and liabilities in your document. Make sure that your power-of-attorney form properly documents all the necessary information that can guide your agent in making the right legal decisions for you.

6. Talk to a lawyer. It is recommended that you consult a lawyer to avoid conflicts or hassles in the future. The lawyer can draft the legal document and inform all the parties involved about the rights and duties stipulated in it. Once the draft is done, the lawyer will keep a copy of the document that will come in handy should legal disputes arise in the future.

7. Sign the document. All the parties, including at least two independent witnesses, must properly sign the form. The form should also be notarized before it can take effect.

The power of attorney is an indispensable legal document that gives you a peace of mind that all your assets are taken care of when you become mentally incapable of making decisions for yourself. You can also prepare one for your elderly family member or relative who has a serious disease or medical disability. In such case, you have to make clear of the person’s needs and goals and specify them properly in the document.

Because of the sensitive nature of this, power of attorneys are often only given to people that the ‘principal’ ( the person giving the power of attorney to the agent) absolutely trusts. This can be a son or daughter, a parent or other close relations.

Do not be fooled with the name. Anybody can be given the power of attorney, even people who are not lawyers, although most of those who are given such responsibilities are family lawyers of rich people or corporate lawyers of big corporations, whose job entails them to represent the CEOs or the big bosses, which are often required to be in three places at the same time, which is of course, not humanly possible.

Power of attorney often has a scope, depending on the agreement or the dictates of the principal. In most cases, the power of attorney will only have an effect on specific cases or issues. Some will be stating a specific period of time while others will be point to more specific business dealings. For instance, a power of attorney may be granted to sign a business deal with Conglomerate X but will not be effective when signing deals with Conglomerate Y even if they are signed on the same day.

It all depends on the legal papers that accompany the power of attorney. And these papers stating the contract for the power of attorney is required to be shown before an agent can act. Some countries accept oral agreement but others like the United States rely on written documents to deem it legal. Because of the birth of the internet and the computers, powers of attorney sent over the internet or those that are electronically given are accepted in some states and also in some countries.

Remember though that regardless of the period stated on the contract, the power of attorney will be void once the principal dies. When they fall ill, become physically or mentally incapacitated, some power of attorney agreements are honored provided that they have the provision that the contract will still be valid when these things happen. Otherwise, they will also become void.

It is also assumed that the agent will be completely honest and truthful with his business dealings in representing the principal. When he is proven to be dishonest and fraudulent, all the things that he has signed when the power of attorney is still in effect will be deemed invalid.