When the Power Begins and Ends Under a Power of Attorney
When the power begins and ends under a Power of Attorney
What is a Power of Attorney?
As part of your estate planning process, a Power of Attorney should be prepared. A Power of Attorney is a legal document which authorizes another person, your “Attorney”, to act on your behalf. A general Power of Attorney grants your Attorney the power to deal with any and all of your property, financial and legal matters, including selling your house, making deposits or withdraws from your bank account and dealing with your income taxes.
When can my Attorney act?
Many people think a Power of Attorney is only used when they are not competent to make decisions on their own. Although that is often the case, a Power of Attorney can also be drafted so it is effective immediately, meaning the Attorney may act on your behalf as soon as the document is signed. There are different reasons why you may want your Attorney to have immediate authority to act on your behalf. A spouse or business partner may need the ability to continue to complete work if you travel frequently. Another reason is to make it easier for your Attorney to act if you do become incompetent. Your Attorney must present the Power of Attorney document to any financial institution, organization or person which may require it and when it is effective upon incompetency, then your Attorney must establish that you are incompetent to act. In certain cases, incompetency may be easy to establish. Other times, it can be difficult to find a physician to provide a certificate of incompetency, particularly in cases where a medical condition or medication causes a person to be in and out of lucidness. You may feel such checks and balances are essential if your Attorney will have control over all their property and money. On the other hand, you may view such steps as unnecessary for your Attorney to go through. One option if you want to avoid your Attorney having to obtain a certificate of incompetency but on want that person to act if you become mentally incapacitated is to keep possession of the Power of Attorney while letting that person knows the whereabouts if it is needed.
Can my Attorney just do what they want with my money?
Your Attorney always has a high legal duty and responsibility to act in your best interest, whether you are competent or not; an Attorney cannot simply do whatever they wish with your money and assets. The Attorney has must keep an accurate accounting of everything that is completed and provide it to you or your executor after death. If he or she does not, or the accounting is not satisfactory, the attorney might be found liable for any losses and might be removed by the court. Your Attorney must not act contrary to your interest and legal action could be taken if they do.
When does my Attorney’s power end?
You can state in your Power of Attorney when the Attorney’s power is terminated, either on a particular date or when a certain event occurs. If you do not specify in the document, the Attorney’s power end upon the earlier of:
- your death, when the executor under your Will would take over.
- the death or mental incapacity of your Attorney, in which case the Alternate Attorney may assume the powers.
- if you become bankrupt, as your trustee would then be responsible.
- you Attorney’s renunciation of his duties or appointment, in which again the Alternate Attorney may assume the powers.
- you revoke your Power of Attorney document.
- when a Court appoints a guardian for you.
This newsletter is produced by Wickwire Holm to keep our clients and friends informed of developments in the law and immerging issues. It is intended for general information purposes only. In preparing and circulating this newsletter, Wickwire Holm is not providing legal or other professional advice. Readers are urged to consult their professional advisers before taking any action on the bases of information contained in this newsletter.
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