Haws & Burke, PC Haws & Burke, PC - Law Firm & Attorney

Financial Power of Attorney

A financial durable power of attorney may take effect immediately or at a later time, activated by the occurrence of a specific date or a specific event.

A durable financial power of attorney which takes effect immediately is often more convenient for the agent because the agent is authorized to act now.

A power of attorney which requires an event to occur before the agent can act is sometimes referred to as a springing power of attorney. The agent under a springing power of attorney must demonstrate that the event has occurred before others will recognize the agent's authority. If the power of attorney is activated only when the person becomes incapacitated as verified by a doctor, the agent may need to obtain a written report from a doctor stating the person is incapacitated. Some financial institutions require these medical reports to be updated periodically by a doctor before allowing the agent to continue to act. While for some, it may be comforting to know that the agent cannot act until you are incapacitated, this requirement adds to the difficulties the agent faces. For this reason, many clients choose to have the financial power of attorney become effective immediately. We provide you with specific recommendations to add a protective layer so as to balance convenience against potential abuse.

While most durable financial powers of attorney authorize the agent to deal with all the principal's financial matters, some grant only limited authority. The authority can be limited to specific times, such as from midnight June 1 to midnight September 1. This limitation may be helpful if the principal is traveling overseas and merely wishes the agent to handle the financial matters while he travels.

The durable financial power of attorney can be limited to a specific bank or brokerage firm. Many times these financial institutions have their own financial power of attorney forms approved by their legal and compliance departments. Visiting the financial institution with your agent and completing the form in the presence of their staff is sometimes the fastest and best manner to have your agent prepared to act.

We often recommend that our elderly clients register their agents with banks and brokerage firms so that their agents are in a position to act immediately.

While there are distinct advantages to using the banks' and investment brokerage firms' forms, we usually recommend that you have us prepare a general all-encompassing durable power of attorney to handle those matters beyond the scope of the financial institutions' forms, such as tax matters.

Not all financial powers of attorney are durable. For most of our clients, it is important that the power of attorney be durable. If your power of attorney is not durable, it means that the authority of your agent terminates when you are incompetent. For instance, if you were rendered unconscious, your agent's authority under a non-durable financial power of attorney would cease. However, with a durable financial power of attorney, your agent's authority would continue while you were incompetent.

You may grant your agent the power to make gifts during your lifetime and also to change your beneficiary designations.

We discuss with you the powers you wish to grant to your agent and then we prepare the document to fit your desires.

Acting as Agent Under a

Financial Power of Attorney

Many agents named under a financial power of attorney begin acting on their own without getting advice to guide them through the vast array of ramifications. We have many years of experience assisting agents to consider the various tax and legal consequences so that the agent can make prudent decisions. We recommend the agent have a consultation with us to learn the legal requirements imposed upon an agent and to receive some guidance on handling the situation with other family members. Neglecting to obtain good advice in advance can lead to multiple and complex problems both with financial institutions and with family members. Agents need to know before they act that withdrawing funds can affect tax consequences, Medicaid eligibility and the ultimate distribution of assets potentially to the detriment of certain family members.

From the beginning, agents need to learn how to handle the responsibility imposed upon them.

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