Why You Need a Power of Attorney
Durable Power of Attorney for Finance (DPOA) is a legal document that gives someone authority to act on your behalf for legal and financial matters. If you are incapacitated, it enables your agent to make decisions such as paying bills, filing taxes, handling insurance, pensions, social security, etc.
Why Do I Need a Power of Attorney
The problem is once you need it, it’s too late to create it!
MYTH #1: Because of my relationship status, I can make financial decisions for my spouse, aging parent or young adult child right now.
Similar to an Advance Health Care Directive, you cannot make legal and financial decisions for a family member without a properly executed DPOA. It does not matter that you have a familial relationship. Only a DPOA or court order authorizes you to make these decisions for someone else.
MYTH #2: I can create a DPOA without an attorney. Besides, it’s not that important because I don’t need help right now.
There are many free DPOA forms, but they have certain limitations that you should be aware of. Having a poorly drafted one can lead to many pitfalls where court is the only solution. Planning with a qualified attorney is required to ensure that your loved one can help you when needed.
Common Pitfalls
- The Power of Attorney is “General” and not “Durable”
- A General Power of Attorney expires at the end of the specified time period or when a specified activity is completed. It loses effect when you become incapacitated.
- A Durable Power of Attorney has no such limitations and continues to be effective even if you become incapacitated. A DPOA is critical for everyone to have.
- A DPOA should include at least two Attorney-in-Fact Agents. A DPOA can list several individuals to serve as Attorney-in-Fact; however, listing the correct people in the right order is critical to it working effectively and avoiding problems.
- A DPOA confers many powers to the Agent but some must be specifically included or they are automatically excluded. It’s very important that you understand the nature and meaning behind each of those powers. California also has particular rules that must be specifically stated in the document in order for the DPOA to work seamlessly and effectively.