We discussed the basic definition of a Power of Attorney (POA) in Part 1 of our series on POAs. Now let’s take a closer look at the powers granted to the Agent by a POA, and what responsibilities accompany them.
A POA could be “limited” to a few or one authority, i.e. sign papers for you at a Real Estate Closing. For our purposes we recommend a “General/Durable” POA. By executing a General Durable POA, the “Principal” authorizes his or her “Agent” to sign documents for him/her, access money, pay bills, make decisions for health care or living arrangements, and just about anything the Principal could do for himself/herself. The Agent steps into the shoes of the Principal and handles the Principal’s affairs.
The Agent is obligated to handle the Principal’s assets and make decisions in such a way that is in the best interest of the Principal.
A “durable” POA means that the POA is still valid even if the Principal becomes incapacitated or disabled.
The Agent can move the Principal’s assets to another account owned by the Principal (the Agent should have access to this account; any financial institution can help you with these details). In addition, the agent can transfer assets, sell the Principal’s home, pay bills, talk to doctors, and make medical decisions for the Principal and do whatever is necessary or advisable to properly protect the Principal.
The Agent should sign any documents on behalf of the Principal as follows:
(Principal’s name), by (Agent’s name) his/her Attorney in Fact.
(Principal’s name), by (Agent’s name) his/her Power of Attorney.
It is important so the Agent sign documents in exactly this way. This is because it must be clear that everybody understands that she/he is acting as the Agent, and not individually guaranteeing any payments owed by the Principal.
Note that many financial institutions do not fully understand a Power of Attorney. They may say that the Power of Attorney has “expired”. This is not so. If you have any trouble at all, please call us immediately and we will resolve the issue for you.