A POA or Power of Attorney of property is a legal document that gives someone else the authority to manage your financial affairs. This can include paying bills, managing investments, and even selling property on your behalf.
A POA can be pretty broad in scope, or it can be particular. You can give someone a POA for just one task, or give them broad authority to handle all of your financial affairs. Let’s learn more about the power of attorney in this article.
What Assets Are Covered by a Property Power of Attorney?
A property power of attorney can cover any property you own, including real estate, vehicles, stocks and bonds, bank accounts, and other personal property.
You can give someone authority to manage all your assets or just certain ones. For example, you could delegate authority to your agent to sell your property but not your stocks and bonds.
When Is Power of Attorney Most Commonly Used?
Power of attorney is frequently used when the principal cannot make choices about their assets. This can include being hospitalized or receiving other sorts of medical treatment that limit the principal’s ability to act on their own. If an individual is rendered unconscious while assets must be managed, the agent can act in the interim using power of attorney.
A property power of attorney may also be given in the following circumstances:
- When an individual is going to be out of the country for an extended time, and someone will need to handle their affairs in their absence
- When the principal is elderly or has cognitive impairments and wants to appoint someone to manage their affairs
- When the principal wants to give someone else authority to manage their affairs but does not want to give them outright ownership of their assets
How a Property Power of Attorney Works?
A property power of attorney lets you name someone (known as your “agent” or “attorney-in-fact”) to manage your financial affairs for you. The agent can have very broad powers or just a few, depending on what you want to give them authority to do. Thus, it would help if you chose some that you trust.
To create a property power of attorney, you must sign a legal document called a POA form. This form will list the powers that you are granting to your agent. It is important to be very specific about what you are authorizing your agent to do.
Once the POA document is completed and notarized, your agent will have the power to act on your behalf. They can begin managing your assets immediately.
If you later decide that you no longer want your agent to have power of attorney, you can cancel the document at any time. To do this, you must notify your agent in writing that they are no longer authorized to act on your behalf. You should also inform any financial institutions or other parties that might have been dealing with your agent.
What Are the Types of Power of Attorney?
The different types of powers of attorney are:
- General Power of Attorney: A general POA gives your agent broad authority over your financial affairs. This type of POA is often used when the principal is going to be out of the country or otherwise unable to manage their affairs for an extended period.
For example, if you are going to be in the hospital for an extended stay, you might give your spouse a general POA so that they can pay your bills and manage your finances while you are unable to do so.
- Limited Power of Attorney: A limited POA gives your agent more limited powers and is often used in specific circumstances like selling a piece of property or handling a real estate transaction.
For example, if you’ll be out of the country and need someone to manage the sale of your home, you can grant your agent a limited power of attorney so that they can sign the required documents on your behalf.
- Springing Power of Attorney: A springing POA doesn’t go into effect until a specific event or date occurs, like if you become incapacitated.
For example, you could have a springing POA that authorizes your agent to manage your finances if you ever go into a coma. The POA would only go into effect if you were in a coma and expire if you ever came out of the coma.
- Durable Power of Attorney: A durable POA continues in effect even if you become incapacitated. This contrasts with a non-durable POA, which expires if you become incapacitated.
For example, if you have a non-durable POA for your finances and become incapacitated, your agent would no longer have the authority to manage your affairs. However, if you have a durable POA, your agent would still have the power to manage your affairs even if you become incapacitated.
- Healthcare Power of Attorney: A healthcare POA gives your agent authority to make medical decisions on your behalf if you cannot do so yourself. This could include decisions about life-sustaining treatment, surgeries, and other medical procedures. This type of POA is sometimes known as a “medical power of attorney” or a “durable power of attorney for healthcare.”
For example, if you’re in a car accident and cannot communicate, your healthcare POA would give your agent authority to decide your medical care.
Who Should Sign a Durable Power of Attorney?
When signing a durable power of attorney, keep the following points in mind:
- The principal must be competent to sign the POA. This means that they must understand the nature and extent of the authority they’re granting to their agent.
- If the POA is for financial matters, the principal must sign the POA in the presence of a notary public.
- If the POA is for medical decisions, the principal must sign the POA in the presence of two witnesses.
- The witnesses must be at most 18 years old and not related to the principal or the agent.
How Many Witnesses Are Required for a Property Power of Attorney to Be Valid?
A property power of attorney does not require a certain number of witnesses to be legitimate; however, it is generally advised that the principal sign the POA in the presence of two witnesses. Witnesses must be at least 18 years old and unrelated to the principal or agent. Additionally, if the POA is for financial matters, the principal should sign the POA in the presence of a notary public.