Powers of Attorney and How They Fit into Your Estate Plan
One of the key benefits to becoming a legal adult is the ability to make your own decisions and enter into legally binding agreements. Prior to reaching this life stage, a person is not permitted to things like buy a car, open a bank account, or make health care decisions without the consent of a parent or legal guardian because the law views them as not have the capacity to make such an important choice. This same lack of capacity is often an issue as a person approaches the end of his/her life and requires someone to intervene to keep that person’s affairs in order. Proper estate planning will include the possibility that an individual may need someone to take over their financial and healthcare decisions and include a power of attorney to transfer that authority to another party. A power of attorney is a very powerful legal document that gives someone authority to act on another person’s behalf, and is an important tool for planning for life’s eventualities.
Types of Powers of Attorneys
There are three general types of powers of attorney – limited, general, and durable. A limited power of attorney grants authority for a specific purpose or act. An example would be giving authority to someone so he/she can purchase a home in another state or country. A general power of attorney grants someone very extensive powers that could encompass all legal acts. It is required that the scope of the authority is included in the document. Finally, there are durable powers of attorney, the most common type, that extend validity of the document once the creator becomes incapacitated. This is necessary because a power of attorney normally terminates once incapacity occurs, but the inclusion of specific language in the document that specifies it should survive such an event will prevent that from happening.
The Parties Involved in Powers of Attorney
Generally, there are three parties involved in the creation and execution of a power of attorney – the principal, the agent, and a third party. The principal is the person who grants the authority to act on his/her behalf to someone else. The agent is the person or financial institution given the authority to act. If the agent is a person, he/she must be at least 18 years old. For financial institutions to act as agents, they must possess trust powers, and be permitted to use them in Florida, and have a business location in this state. Finally, the third party is the individual or business the agent deals with in order to act on the principal’s behalf. This could include a bank, a real estate broker, medical staff, or someone selling a car. The possibilities are quite vast.
It is important to note that a power of attorney must be signed by the principal and two witnesses and be attested to by the principal in the presence of a notary public before it is legally enforceable.
When a Power of Attorney Terminates
A power of attorney terminates when any of the following occur:
- the principal dies;
- the principal is incapacitated, unless it is a durable power of attorney;
- the principal is declared partially or totally incapacitated by a court, unless a judge finds the authority given the document may still be exercised;
- the principal revokes the power of attorney;
- the terms of the document provide for termination;
- the purpose of the power of attorney is achieved; or
- the agent’s authority ends and an alternate is not listed.
It is important to note that a power of attorney is enforceable once it is executed, so if the principal does not want to grant authority to agent right away, he/she must retain possession of the document until ready for the agent to act or ask an attorney to deliver it at an appointed time.
Get Legal Advice
A power of attorney is an important and powerful legal document that should be a part of everyone’s long-term plan for asset and health protection. The Tampa law firm of Bubley & Bubley, P.A. has years of experience assisting people with estate planning issues and can assist you with choosing the appropriate legal option for your situation. Contact us to schedule a consultation.