A power of attorney designates a trusted individual to make decisions or conduct transactions on your behalf. They could be related to personal finances, business operations, or medical needs and used for immediate or ongoing purposes. 

This may sound pretty straightforward. You might be tempted to download a free form to take care of it when looking for services online. But will that be enough to ensure the document is legally recognized, important matters are handled quickly, and your specific instructions and best interests are being followed? 

Understanding Powers of Attorney 

Implementing Power of Attorney (POA) documents is an integral part of your estate planning process. All states recognize powers of attorney, but rules and requirements will differ from state to state. The POA document gives one or more individuals the legal authority to act as your agent on your behalf. 

Depending on which POA you choose, you may limit the agent’s power to a particular activity. This might include things like real estate sales or broader applications. 

A power of attorney may give permanent or temporary authority to the agent you appoint. You can set the POA to invoke immediately or have it activated when a particular contingency is met, such as a cognitive disability.  

Other types of powers of attorney include limited, durable, and general POAs. 

For example, a general POA permits the agent to deal with any matters on your behalf that state law allows. Under such an agreement, the agent may sign checks, handle bank accounts, sell property, manage assets, and file taxes when you are unable or simply upon your request. This POA has a WIDE latitude of authority. Therefore, there needs to be coordination between you and your agent to ensure your best interests are always represented. 

The better-known powers of attorney are durable and remain in effect even if you become incapacitated. The word “durable” means the powers will remain intact even when you can no longer manage your affairs.  

You may also rescind powers of attorney. However, most states require written notice of revocation to the named individual or entity. 

The Flawed Freebie 

Consider the following scenario when free, online powers of attorney aren’t as helpful as you hoped. 

Suppose you and your spouse execute a free online power of attorney to access accounts and sign for each other if needed. The document seems noticeably concise, making you wonder why legal documents need to be so lengthy and expensive in the first place. 

Your spouse later becomes incapacitated and can no longer manage his finances. You go to talk to his IRA administrator and proudly provide them with the free power of attorney. However, the financial institution denies you access. You discover why: The institution recognizes that your free power of attorney does not meet the requirements of a valid power of attorney or that it does not contain the specific powers you are seeking.  The document failed. 

To make matters worse, any flaws or limitations with that power of attorney cannot be updated, as your spouse would need to have the capacity and understanding to execute a new power of attorney, even with an attorney. This situation is not uncommon. In this case, we recommend that the party seeking to assist the incapacitated individual pursue legal guardianship.   

Contact our office for assistance in getting it done right the first time.