A power of attorney (POA) is a document that gives someone else the legal authority to act on your behalf. You may need to give someone a POA if you’re unable to handle your own affairs due to health problems, extended travel, or business obligations.
There are two main types of POAs:
1) Durable: a durable POA remains in effect even if you become incapacitated.
2) Springing: a springing POA only goes into effect if you become incapacitated.
A POA can be quite helpful in the event that you can’t physically sign documents or make decisions for yourself. For example, if you run a business and need to sign contracts but are out of the country, you could give someone a POA so they can sign on your behalf.
The Mechanism Of Power of Attorney
The person you appoint as your attorney-in-fact is known as your “agent” or “attorney-in-fact.” Your agent will have the legal authority to make decisions on your behalf and take actions that legally bind you according to the terms of the POA.
You should choose someone you trust implicitly to be your agent. This person could be a family member, friend, or even a professional such as a lawyer or financial advisor.
Some common powers that can be granted include the ability to buy or sell property, enter into contracts, file lawsuits, withdraw money from bank accounts, and sell stocks and other securities.
You can give your agent as much or as little power as you want. You can also specify when you want the powers to take effect. For example, you may want your agent to have the power to sell your house if you become incapacitated. But you may not want that power to take effect until after you’ve been diagnosed with a terminal illness.
Why You Need a Power of Attorney
Although it may seem like something that only older people need to worry about, there are many reasons why having a power of attorney can be beneficial for people of all ages. If you are involved in a car accident or suffer a serious illness.
For example, you may be hospitalized and unable to communicate your wishes regarding financial and medical matters. In such cases, a power of attorney can give your representative the authority to make important decisions on your behalf.
Another reason why having a power of attorney can be beneficial is that it can help you avoid probate. Probate is the legal process that is used to settle an estate after someone dies. If you die without a will or other estate planning documents in place, your assets will likely have to go through probate.
Probate can be time-consuming and expensive, so having a power of attorney in place can help ensure that your estate is handled according to your wishes without having to go through probate.
Risks Of Granting Someone Power Of Attorney
While having a POA can be helpful, there are some risks to consider before granting someone this type of authority. First and foremost, you’re giving this person a great deal of power over your finances and property.
As such, it’s important to choose someone who is responsible and trustworthy. You should also be aware that there is always the possibility that your agent could abuse their power and take advantage of you financially.
Another risk to consider is that your agent will have access to information about your finances that others might not know about. For example, if you have joint bank accounts with your spouse, they’ll now have access to those accounts and will be able to see how much money is in them. If privacy is important to you, this is something to keep in mind before granting someone power of attorney.
Conclusion
A power of attorney is an important estate planning tool that everyone should have in place. Overall, having a power of attorney can be very beneficial in the event that you’re unable to handle your own affairs due to health problems or business obligations .
Before granting someone power of attorney , however , it’s important to consider the risks involved so you can make an informed decision. Choose someone trustworthy who will act in your best interests ,and don’t hesitate to get professional help if needed.
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