Gifts are an important tool for many estate plans, and your attorney-in-fact can make gifts on your behalf, subject to guidelines that you set forth in your power of attorney. It is prudent to include in the power of attorney a clear statement of whether you wish your agent to have these powers. Even without amending your will or creating trusts, an agent can affect the outcome of how your assets are distributed by changing the ownership (title) to assets. Although an agent cannot revise your will on your behalf, some jurisdictions permit an attorney-in-fact to create or amend trusts for you during your lifetime, or to transfer your assets to trusts you created. In addition to managing your day-to-day financial affairs, your attorney-in-fact can take steps to implement your estate plan. What Kinds of Powers Should I Give My Agent? In some instances, greater security against having a guardianship imposed on you may be achieved by you also creating a revocable living trust. A power of attorney allows you to choose who will act for you and defines his or her authority and its limits, if any.
Few people want to be subject to a public proceeding in this manner so being proactive to create the appropriate document to avoid this is important. If a court proceeding, sometimes known as intervention, is needed, you may not have the ability to choose the person who will act for you.
People appointed in this manner are referred to as guardians, conservators, or committees, depending upon your local state law. If you do not have a power of attorney and become unable to manage your personal or business affairs, it may become necessary for a court to appoint one or more people to act for you. Such a disability may be temporary, for example, due to travel, accident, or illness, or it may be permanent. Another important reason to use power of attorney is to prepare for situations when you may not be able to act on your own behalf due to absence or incapacity. If you are buying or selling assets and do not wish to appear in person to close the transaction, you may take advantage of a power of attorney. Why would anyone give such sweeping authority to another person? One answer is convenience. However, your agent generally should not need to present the power of attorney when signing checks for you. Similarly, the agent has to present the power of attorney to a broker or banker to effect the sale of securities or opening and closing bank accounts. Similarly, an agent who signs documents to buy or sell real property on your behalf must present the power of attorney to the title company. For example, if another person is acting on your behalf to sell an automobile, the motor vehicles department generally will require that the power of attorney be presented before your agent's authority to sign the title will be honored. Often your agent must present the actual document to invoke the power. The person named in a power of attorney to act on your behalf is commonly referred to as your "agent" or "attorney-in-fact." With a valid power of attorney, your agent can take any action permitted in the document.
A power of attorney may be revoked, but most states require written notice of revocation to the person named to act for you. The latter is called a "springing" power of attorney. The power may take effect immediately, or only upon the occurrence of a future event, usually a determination that you are unable to act for yourself due to mental or physical disability. The power may give temporary or permanent authority to act on your behalf. The power may be limited to a particular activity, such as closing the sale of your home, or be general in its application. A power of attorney gives one or more persons the power to act on your behalf as your agent. A power of attorney is accepted in all states, but the rules and requirements differ from state to state. An important part of lifetime planning is the power of attorney.
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