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What Is A Power Of Attorney

By: Jason Markum

Most people have heard the term power of attorney but few people actually know what it means and what it’s all about. A power of attorney is a very simple document that lets you appoint someone else for specific reason. Most of the time the specific reason has to do with making financial decisions, and signing financial documents.

In fact most of the time powers of attorney are used in case you become disabled in some way or if you get sick and need somebody to handle your financial affairs for you.

It is very simple to create a power of attorney. You can find the forms online, or at a stationery store usually, or in any basic legal software that you can buy in any office supply store. Most states allow you to simply write the name of the person that you’re going to designate as your power of attorney onto the form and then sign your name. You usually have to do this in front of a notary public, which you can find in almost every bank. They usually cost between five and $10 to have the notary stamp your document to make it official.

Once you’ve signed a power of attorney, it does not mean that this person has power over your financial affairs forever. You can revoke the power of attorney at any time for any reason, or for no reason at all. You can either grant your agent broad powers dealing with just about anything, or you can grant them very specific and narrow powers limiting them to even a single specific action such as signing one document one time.

The more specific and limiting the power of attorney is, the more complicated the document will be that you create. Notice though that complicated does not necessarily mean difficult. This does not have to be a difficult legal document to create.

Along with specific powers that you grant, you can also specify a timeframe of the power of attorney. You can specify that it takes effect immediately, you can specify that it takes effect during a certain time frame (say August of next year), or you can specify that it takes effect upon a certain action; for instance if you ever get in a car wreck and are incapacitated then the power of attorney would kick in.

One limitation of the power of attorney is that it ends automatically when you die. It also ends if the agent you choose as your power of attorney dies. So if you designate your friend Bob to be your power of attorney if you ever get in a car wreck, and then two weeks later Bob dies… your power of attorney is no longer valid.

The main risk involved with the power of attorney is accountability. You can, in effect, fire the agent you designate as your power of attorney… that is you can dissolve the power of attorney whenever you want. But as long as the document is in force, you have very little control over what the power of attorney does unless you specified exactly what their powers are when you first create the document. This means that you should either 1, pick somebody you trust completely, or 2, be very specific when listing the powers that you grant your power of attorney agent when you first create the document.

Generally speaking, you don’t need to hire an attorney to draft a power of attorney document. However, if you have any questions, or if your power of attorney document becomes too complicated… you should absolutely discuss it with a licensed attorney.

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