Financial Power of Attorney Tips

In this, the final article of our Financial Power of Attorney (FPOA) series, we will be providing you with some helpful tips to help you get a FPOA that best accomplishes your goals, and to help you avoid any of the issues that can arise with these documents. A FPOA is a valuable document that allows you to give legal authority to an agent of your choice to help you manage your legal affairs. There are three main categories of FPOA: Limited, General and Durable. These three types are distinguishable by how they end. A Limited FPOA is used for a specific task and ends at a predetermined date, or when the task is completed. A General FPOA often gives broader powers to your agent and ends if you become incapacitated. A Durable FPOA does not expire if you become incapacitated. One version of a durable FPOA is a Springing FPOA; this type of FPOA becomes effective when an event specified in the document occurs; this event is usually the incapacity of the principal.

For the purpose of this article, we will be focusing mainly on Durable FPOA. This type of FPOA is very important for estate and incapacity planning. Accidents and illness can affect anyone at any time; it is valuable for everyone to protect themselves in case the unexpected occurs. A Durable FPOA is a relatively inexpensive insurance policy that will allow your loved ones to keep your affairs in order when you are unable to.

What if I don’t have a FPOA?

If you don’t have a FPOA, your loved ones will not be able to make important about your financial matters. In order to get the authority to act, your loved ones will have to go to court and be named your legal guardian. This will be expensive and take time.

I Don’t Want to Give Up My Financial Independence

Many people delay in getting FPOA because they feel they are giving up independence or control. This does not have to be the case. You can obtain a springing FPOA that does not go into effect until after incapacitation occurs. In this case, while you are still able to make financial decisions for yourself, your agent does not have any legal authority to make financial decisions for you. Even before that, your agent must act at your direction, and has a fiduciary duty to act in good faith.

Transfer and Storage of FPOA Documents

Even though a FPOA does not mean that you are giving up your financial independence, it is still a very powerful grant of authority. You want to make sure that it is in a safe and secure place. You should hold off on giving the executed document to your agent until the time comes when you may need your agent to start helping you manage your financial affairs. By keeping the document yourself, you prevent a situation where the document is lost or damaged, and you don’t know about it. You should let your agent know where the FPOA is, and how to access it in case of a more sudden incapacitation. One place that you should not put estate planning documents is in a safety deposit box. The reason for this is because your agent will need legal authority to open the safety deposit box; authority the agent cannot prove they have, without the contents of the box. The best place to keep your documents is in a waterproof and fireproof box that is easily accessible by both you and your agent. You may also want to store a copy of the document with your attorney.

Avoiding Invalid FPOA

A FPOA has a requirement that, to be valid, the principal must be of sound mind when the document is signed. Businesses and institutions where your agent may attempt to use the FPOA may have different requirements. To make sure that your FPOA is seen as valid, you should sign the document in front of multiple witnesses. If possible, try to have a doctor or lawyer, who can help confirm your state of mind, serve as a witness to the signing. You should also have an attorney draft or review your FPOA to make sure it is complete and valid.

For third parties, it is often important that the powers given in the FPOA be specifically listed in the document. These third parties often balk at blanket statements that give the agent all of the powers of the principal. These third parties want to protect themselves from future lawsuits by making sure that they do not give access to your accounts wrongly. Many will have specific wording that they require before they accept the document. Work with your attorney during the drafting process and let him/her know some of the potential parties that your agent may be dealing with. Similarly, third parties will often not accept a valid out of state FPOA. Make sure that you update your estate planning documents after major life changes, including moving house.

Conclusion

These are just a few tips on what to consider before and after obtaining a financial power of attorney. There are many other options and things to consider. When you are ready to get one of these important documents, put together a list of questions and goals for the document. It is important to work with your estate planning attorney so that they are able to draft a document that is customized to your needs.