A Power of Attorney is a document between two parties, a principal and an agent, through which a principal can appoint someone to make financial decisions on their behalf. The principal is the person who signs the Power of Attorney and allows the agent to take over financial assets. Often, documents such as this are used when a principal is unable to make their own financial decisions, or in some cases, simply needs someone else to make such decisions for them. It is a serious document which should be entered into after much consideration.
You should consider having a POA if: You travel out of the country often. You are employed in a hazardous work environment. You have been diagnosed with a serious illness. You have business or property that you would want maintained if you were unavailable. You have children that would need to be provided for if you were to become incapacitated. You want a specific person to be responsible for your affairs. You have rules about how you run your business, property, or life, and you want to ensure they are upheld. You are approaching old age and would like to designate a representative for yourself.
Yes, there are four types of POA forms.
- General: A general Power of Attorney form allows your representative to manage all of your property-based and financial affairs. This type of POA grants them general authority.
-Specific/Limited: A specific Power of Attorney form limits your representative s responsibilities to certain types of decisions. You can choose to allow someone to only make decisions in relation to business, for example.
- Ordinary: An ordinary Power of Attorney is only valid while you, the principal, are capable of making decisions. This type of POA becomes invalid in the event that you become incapacitated.
- Durable: An enduring Power of Attorney is when the contract continues even if you, the principal, become incapacitated.
If you take the time to create a Power of Attorney, you want to make sure that it will be effective. There are situations where your document may be rejected, or powerless if you aren’t careful. Here are a few steps you can take to help ensure your POA won’t be powerless:
- Use a state-specific form – Each state has different laws and statutes governing this document. Our state-specific forms are customized for each particular state.
- Make sure you have all signatures and authorizations – Some banks and financial institutions have specific requirements as to who needs to sign the document.
- Keep it up-to-date – If your state has rewritten its laws or your document is more than several years, it may be considered ‘stale’ and may need to be updated.
- Get it witnessed and notarized – Sign your document in front of witnesses, stating that you were competent and signed the document voluntarily. Also make sure to get your document authenticated by a notary public.
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