A general power of attorney (POA) is a legal document that allows one or more people (or even an organization) to make financial and legal decisions for you, in the event you are unable to make them for yourself. It can be a critical document to have in place so in the event of an emergency, you'll have a trusted individual who can act on your behalf and in accordance with your wishes.
There are many different situations when you may need to have someone you trust acting in your best interest. For example, you may be traveling out of the country for a period of time and need someone to handle your business operations. Or, you may become incapacitated due to an illness or accident and need someone to manage your daily finances, insurance, and banking.
If you're looking to set up a power of attorney, here are five basic steps that can guide you easily through the initial setup process.
- Decide what type of POA you need.
A general POA allows a person to act on your behalf for an unspecified period of time and on an unlimited or undefined scope of work. A specific POA restricts (or limits) the power to a single transaction or type of transactions. Depending on your needs, you'll need to select one or the other.
- Give thoughtful consideration to your POA
Granting someone power of attorney means that you're allowing them to do things such as file your tax returns, borrow money, and have access to your financial accounts. Because they'll be able to make legal, financial, and even medical decisions on your behalf (in some cases), choose someone that you trust. However, before drawing up the paperwork, discuss your plans with your proposed power so they're aware of the risks and responsibilities they'll be assigned.
- List your assets
Be sure and document all of your assets and liabilities so that your attorney can include them in the POA. It's easier to do this ahead of time rather than trying to think of everything during your appointment with your attorney.
- Select a witness
Like many legally binding documents, a POA needs to be signed and witnessed. It's best to be prepared and to gather your witness ahead of time.
- See a qualified attorney
The Internet has brought many conveniences to our home PCs, including a plethora of do-it-yourself legal documents. It's in your best interest to invest a small sum of money to have a POA drawn up by a qualified attorney who knows your state's laws, can answer your questions, and handle any legal disputes should they arise.
Read more about estate planning.