Power of attorney is when you designate someone other than yourself to make decisions in legal matters on your behalf. This process doesn’t need to be hard or even all that complicated, but you need to get it done right. There are common mistakes people make involving their power of attorney, but there are also things you can do to avoid them.
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Make Sure You Give Them Authority Over Every Kind of Property
Many people assign power of attorney for financial matters so someone can handle their money if they’re incapacitated or not otherwise available. However, as you get further into life, you might have other kinds of property to be managed instead of just your bank accounts. This can range from insurance and annuities to trusts and even cryptocurrency. Check or initial every box on the list on your power of attorney form.
Be Sure Your Power of Attorney Covers Health Care and Finances
Assigning a health care power of attorney is crucial if you want someone you know and trust to make medical decisions for you if you are physically or mentally incapacitated. Otherwise, it might be up to doctors or someone else. However, health care power of attorney doesn’t automatically equate to the financial power of attorney as well. You have to designate someone for both. Furthermore, as NOLO points out, you need to make sure that the relevant financial institutions accept that power of attorney so there aren’t delays or even rejections when the time comes.
Not Making It Fully Legal
It’s relatively simple to find the power of attorney documents and even fill them out. However, for them to take full legal effect, you might need to file them with local municipal authorities. Your best bet is working through a local lawyer who can make sure that the documents aren’t just filled out appropriately but also implemented in such a way that they have a legal impact instead of just possibly applying when it might matter. Consulting an attorney also helps you make sure you don’t put the power of attorney rights and responsibilities into the wrong hands or actually give them too much power.
Failing to Understand Your Agent’s Duties
The state you live in likely has a statute about the power of attorney rights and responsibilities. This is a great place to start if you want to familiarize yourself with what an assigned power of attorney agent can and shouldn’t do for you.
Actually Using It
The biggest mistake you might make with power of attorney is simply not using it. The minute you sign the document and have it filled out correctly, you can start applying this benefit to your advantage. File it with your bank, your insurance, your investments, and any retirement vehicles you have. Keep your financial advisor in the loop, too.
It’s not always about end-of-life situations or dire medical emergencies. If you assign someone you trust power of attorney, they can sign closing real estate papers if you just happen to be out of town that day.