How To Name A Power of Attorney

A power of attorney (POA) is someone you appoint to make legal and financial decisions on your behalf should you no longer be able to do so.

In the power of attorney document, you, the “principal,” name someone to be your power of attorney and specify the powers that you give to the POA, or “agent.” The specific powers of the POA are detailed in the power of attorney document, and can be limited to certain powers or comprehensive.

Reasons for naming a power of attorney

A power of attorney is generally appointed either for a specific purpose (for example, to sign a document when your cannot be present to sign) or as protection in case you become incapacitated or incompetent. If you should become incapacitated or incompetent and not have a power of attorney, no one can legally handle your financial and legal affairs. If a POA has been appointed, however, there will be no lapse in your ability to control finances or legal matters, as the agent will be able to act on your behalf.

The agent you name as your POA can be responsible for:

  • Bill paying
  • Banking transactions
  • Investments, including the management or sale of any stocks or bonds
  • Managing or selling real estate
  • Managing insurance, including overseeing the payment of any premiums
  • Preparing and filing tax returns

Types of power of attorney

There are three types of power of attorney. The main differences between these POAs is when they go into effect and when they expire.

What type of POA do you need?

For the purposes of estate planning and end-of-life planning, a durable power of attorney is generally recommended, as the POA immediately goes into effect upon signing and remains in effect even if you become incompetent or incapacitated. With a DPOA, there is no question about when the POA becomes effective (as there often is with a springing POA) and the agent may act on your behalf if you become incompetent or incapacitated (which is not the case with a non-durable POA).

Cost

Naming a POA through a legal website generally costs under $50, and can cost as little as $15. If you establish a POA with an attorney the costs may be higher, depending on your attorney’s rate.

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