[W]e’ve all heard the phrase “power of attorney” before. But do you really know what it means? At some point in your life, you may have to create a power of attorney. It’s best then to have a clear understanding about what this means, and how it can benefit you.
A power of attorney is basically a written text where you allow someone else the ability to make certain choices when you’re not available. Because of the phrasing, you may think that “power of attorney” means to give all of your power away to your lawyer. This is a common misconception. The word attorney does not mean that the person named in the document needs legal experience. The person you select is referred to as an “agent” or as a “attorney-in-fact.”
Implementing a power of attorney doesn’t mean that you can’t make your own decisions, it just means that someone else can act on your behalf. Let me give you an example. Say you are put in the hospital, and you need someone to pay your bills or cash some checks for you, this agreement could come in handy. You’re simply sharing your power with someone else. As long as you are coherent and able to make these kinds of choices, the other person must follow through.
Another type of power of attorney exists for those who become incapacitated and aren’t able to make decisions concerning their own financial affairs. This type of power of attorney is called durable power of attorney. “Durable” simply means that your agent can act on your behalf if or when you become unable to do so yourself.
That person or agent is required by law to make the best decisions for you, both financially and physically. By enacting a durable power of attorney, you are allowing the agent to spend your money, deposit checks, cash checks and withdraw money from your bank account.
That person or agent can also sell your property, enter into contracts on your behalf and pursue insurance claims and other legal actions. A lawyer or a notary republic should witness the durable power of attorney document before you enact it. If you do not establish a this type of agreement and become mentally unstable or unfit, a court might step in and do it for you.
The appointed person or agent should maintain separate and accurate records of every transaction, and make sure these records are kept readily available. The power of attorney is considered null or void upon your death. Your will governs the handling of your estate.
If you become uncomfortable with the way the agent is handling your affairs, you can revoke his or her authority under the power of attorney at any time.
It is best to choose someone who you are familiar with. In the end, you aren’t really giving your power away. You are simply having someone use your power for you.