A power of attorney gives one or more people the power to manage your property and your money for you. The person who is given the authority to manage your affairs is referred to as the attorney. The attorney does not have to be a lawyer; it can be anyone over the age of 18.
Not all powers of attorney are the same. An ordinary power of attorney is valid as long as the person who gave it is mentally competent. If the person is no longer mentally competent, the ordinary power of attorney becomes invalid. An enduring power of attorney remains valid if the person who gave it becomes mentally incompetent.
Most people seeking information on powers of attorney are interested in setting up an enduring power of attorney. This ensures that someone they trust will control their finances and property should they become unable to do so.
General & Specific Powers of Attorney
In addition, powers of attorney may be either general or specific. In a general power of attorney, the attorney may act as if he or she is the person who gave the power. In other words, if your mom has given you general power of attorney over her affairs, you can act as if you were your mom. However, if your mom gives you specific power of attorney to do something, such as sell her house, you can only sell the house.
There is also an immediate power of attorney. It gives the attorney control over your finances for a set period of time or until you become mentally incompetent.
With all powers of attorney, you retain control over your finances. You are now sharing authority over your money and property with one or more people.
A power of attorney is not valid after the person who gave it dies. After death, the personal representative named in the will takes control of the deceased's financial affairs and property. If there is no will or no personal representative, the deceased's family may have to apply to the court for a grant of administration in order to distribute the property.
Advantages of Giving Someone Power of Attorney
Giving someone power of attorney while you are of sound mind can be very useful if you have difficulty getting around. If your adult child has power of attorney, he or she can do your banking for you, arrange for a loan for you, manage the sale and purchase of real estate for you, and more.
The advantage of having an enduring power of attorney is, of course, peace of mind. You know that your finances and property will be taken care of if you are unable to make decisions for yourself. Without an enduring power of attorney, your family may have to incur legal costs in order to be allowed to manage your finances should you become mentally incapacitated.
The biggest risk when giving someone power of attorney is that the attorney will mismanage your money. Also, if you give power to more than one attorney, they may disagree about how best to manage your finances, which could lead to problems.
The best way to avoid issues is to appoint someone you trust to act in your best interests. If you're choosing a family member, view them as objectively as possible. Does this person manage his own money well? Is she financially independent and living a lifestyle she's happy with?
When you've decided on your attorney, ask the person if they are willing to be appointed. No one can be forced to accept a power of attorney. The role comes with a lot of legal responsibilities and not everyone has the time and energy to commit.
If you decide to appoint more than one attorney, it may be a good idea to identify how disputes are to be resolved in the power of attorney document.
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We can help you determine which type of power of attorney you need and the information that should be included. Contact us today and we'll help you protect yourself and your property in the future.