A Power Of Attorney, or POA, is someone you pick to handle your financial and legal matters when you can’t do it yourself. For example, if you experience an accident or medical emergency, if you’re fully competent but still need assistance with routine money-management tasks (like helping aging parents with their finances), or if you’re unavailable and need another person to act on your behalf. Here’s are some of the things a POA is authorized to do:
- Pay your bills
- Make banking transactions, such as deposits, withdrawals, and transfers.
- Manage your investments, which includes buying or selling stocks or bonds.
- Buy, sell, or manage real estate, which could mean keeping up with the mortgage payments, paying the rent, or selling property if you need to relocate.
- Oversee your insurance portfolio, which can involve filing claims or the payment of any premiums.
- Prepare and file your tax returns.
As you can see, even though the power of your finances is in their hands, it’s largely clerical and bookkeeping work. It’s common for people to give their spouse or adult children complete authority over everything. However, if you’re concerned about a person’s ability to serve as your POA, you can limit what they can do and name multiple people to take on different tasks.
It Comes In Three Flavors
There are three main types of POA: Durable, Non-Durable, and Springing. Here’s are the differences:
Durable POA: This is the most typical version and goes into effect the moment the paperwork is signed and stays in effect even if you’re deemed mentally incompetent. As long as you’re deemed competent you can change it at any time.
Non-Durable POA: This is used when you need someone to take care of a specific financial or legal goal and expires if, or when, you’re declared mentally incompetent. It comes in handy if, say, you’re away and need someone to close on a house or file your tax return.
Springing Power Of Attorney: This “springs” into action if you become seriously ill, injured, or deemed mentally incompetent.
Now that you understand what it is, here’s how you get it down on paper.
If you need something right now, there are a bunch of online legal services that can help you create a standard POA for around $15-$50 (Examples: RocketLawyer.com, LegalZoom.com).
Since this offers someone in your life a fair amount of “power” -- it’s right there in the name of the document -- it’s always best to consult an estate attorney, who can offer customization, advice regarding the type of POA you need, and legal witnesses in case it’s ever contested. Plus, the price is usually under $200, which is a bargain by most legal fee standards.
However you decide to create your POA, you might have to get the final documents notarized, which you can find here to suit your situation.
A final important point to note about a POA: It’s only in effect when you’re alive. Once you pass the powers of POA are no longer in effect and it’s up to the executor you named in your Will to manage your assets.
By the way, if you already have a POA, great work. You now need to make sure it’s accessible to anyone who may need it. We suggest keeping it with your other important papers and uploading a digital copy to the Legal section of an Everplan along with the location of the actual document to prevent confusion in the event of an emergency.