Financial Power of Attorney

The professionals at The Law Office of Arnold N. Hirsch can help you understand exactly what you need.

What is a Power of Attorney?

A Power of Attorney is a document signed by a Grantor, appointing an Agent and giving that Agent authority to carry out certain tasks for the Grantor.

 

What is a Durable Power of Attorney?

Powers of Attorney originally had nothing to do with appointing decision makers or helpers to those in need because, at the time of their creation, living into old age was uncommon. Under traditional Common Law, a Power of Attorney went out of effect when the Grantor became disabled, making the initial concept of the Power of Attorney a poor tool to help the elderly.

States began adopting legislation to make the Power of Attorney more useful in an Elder Law context. Statutes now provide that, if a Power of Attorney contains language to the effect that the power is intended to survive the disability o the Grantor, the Power of Attorney remains effective until the person dies. The statutes also allow for language permitting the Power of Attorney to come into effect when the Grantor becomes disabled, which is known as a “springing” Power of Attorney because it only springs into effect as a result of a triggering event.

 

What is a General Power of Attorney?

A General Power of Attorney permits the Agent to do any legal act that the Grantor of the Power of Attorney can do. However, this is deceptive as most courts will not allow an Agent under a General Power of Attorney to make gifts on behalf of the Grantor unless the General Power of Attorney contains specific gifting authority.

 

What is a Limited Power of Attorney?

A Limited Power of Attorney is one that specifies the specific acts an Agent can do and nothing more.

 

What prevents my Agent under a Power of Attorney from stealing my assets?

The Agent under a Power of Attorney has a high legal duty to act in the interest to the Grantor, which is known as a Fiduciary Duty and is one of loyalty and conscientiousness that arises out of a special relationship built on confidence and trust. As with any matter, giving someone the Power of Attorney is a risk that should be carefully considered when naming an Agent.

 

Can you require that the agent under a Power of Attorney be bonded?

Yes. If your Agent has a favorable credit rating, he or she can be bonded. This is a rare act but can prove beneficial.

 

How does a Power of Attorney compare to having a Living Trust?

  • There is no law that says people have to deal with the Agent named Power of Attorney. However, because your Trustee becomes the legal controller of your property, others, by extension, have to deal with the Trustee.
  • Powers of Attorney do not usually contain provisions requiring the Agent to give you a periodic accounting of your financial affairs.
  • The Agent under a Power of Attorney cannot make decisions after your death; a Trustee can.

 

Does a Power of Attorney have to be recorded?

A Power of Attorney does not have to be recorded immediately after signing. If your Agent has to handle a real estate transaction for you, the Power of Attorney must be recorded at the time of the transaction. Banking and stock transactions usually do not require recordation of a Power of Attorney.

 

When does a Power of Attorney end?

You can specify a termination or ending date for the Power of Attorney; otherwise, it ends when you become disabled if it is not durable. If it is durable, the Power of Attorney ends at the time of death.

 

Is a Power of Attorney a substitute for having a Will?

NO! A Durable Power of Attorney may survive your disability but it is not immortal as it dies when you die. So, at the time of your death, your Agent will lose all power to make decisions for you concerning who receives your assets. Do not rely on a Power of Attorney to substitute for your Will.

 

What happens if the agent under a Financial Power of Attorney benefits himself?

As of August 1, 1998, it became a felony in the state of Arizona for the Agent under a Power of Attorney to benefit from the exercise of his powers as an agent. The statute also contains an “opt out” provision which can be written into the document and must be separately initialed by the Grantor and a witness.

 

What is wrong with a form power of attorney that I bought in an office supply store?

An important use of a Power of Attorney in Elder Law is to enable family to conserve assets in the event that the Principal has to go into a nursing home. For the Power of Attorney to be helpful, it has to permit the making of gifts on behalf of the person who made the Power of Attorney.

Arizona law prevents an agent from making gifts under a Power of Attorney unless he is specifically given the power to gift. Power of Attorney forms found in office supply stores rarely contain such gifting provisions.

 

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