Some of my clients also request that I draft a “Power of Attorney” for their use. This legal document is very powerful, and before you grant power of attorney to another person, you should be fully confident in your decision. Once you grant them this right, you are giving them full access and control over your finances.
What is Power of Attorney?
Power of attorney documents authorize another person to manage your property and financial matters. The person who grants the power of attorney is called the principal. The individual named to act on the principal’s behalf is called the agent. So, if you grant power of attorney to your spouse, you are the principal and your spouse is the agent.
When you grant a power of attorney to your agent, you are giving them the complete ability and power to act in your place as if they were you. For instance, they can write and sign checks on your behalf, sell your property, and withdraw funds from your bank accounts or safety deposit box – with or without your knowledge and agreement.
Here are some typical “powers” granted to your agent under this legal document:
(A) Authority over real estate transactions (buy or sell a home, or lease an apartment);
(B) Control over your personal property, cars, and insurance;
(C) Ability to manage your bank accounts and retirement accounts; and
(D) Authority to oversee and manage your business.
Limits of Power of Attorney
There can be situations where you might need to grant only a Limited Power of Attorney that permits an agent to act on your behalf for a specific legal matter. For example, when buying or selling a home in a real estate transaction, it is common to use a power of attorney limited to the specific sale or purchase.
Under Connecticut law, the power of attorney has no effect on health care decisions. If you want to appoint someone to make medical decisions on your behalf, you need to use different forms known as a Living Will and an Appointment of Health Care Representative.
The power of attorney is no longer effective when you die. To decide what happens to your property after you die, you need to create a Last Will & Testament to express your final wishes about your property.
You can revoke and rescind a power of attorney at any time. For instance, let’s say you recently divorced. You will likely want to revoke any power of attorney that you granted to your ex-spouse. There is a simple form that you can complete to terminate the old power of attorney.
Any client considering using a power of attorney needs a complete understanding of precisely what they are doing. The document should only grant the specific powers that you want to give to your agent. If the documents aren’t prepared correctly, your agent could be left with either too little or too much power. I strongly recommend that you seek legal counsel and fully discuss your intentions before you sign these documents.