Power of Attorney
In Glendale AZ

Key Components of Getting Powers of Attorney:

What Does a Power of Attorney Do?

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. Often your agent must present the actual document to invoke the power. 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. 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. 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. However, your agent generally should not need to present the power of attorney when signing checks for you.

Why Would You Give Such Authority?

One answer is convenience. 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. Another important reason to use a 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. Such a disability may be temporary, for example, due to travel, accident, or illness, or it may be permanent.

---

Questions?

Speak to an Attorney Now

---

---

Who Should Be Your Agent?

You may wish to choose a family member to act on your behalf. Many people name their spouses or one or more children. In naming more than one person to act as agent at the same time, be alert to the possibility that all may not be available to act when needed, or they may not agree. The designation of co-agents should indicate whether you wish to have the majority act in the absence of full availability and agreement. Regardless of whether you name co-agents, you should always name one or more successor agents to address the possibility that the person you name as agent may be unavailable or unable to act when the time comes.

There are no special qualifications necessary for someone to act as an attorney-in-fact except that the person must not be a minor or otherwise incapacitated. The best choice is someone you trust. Integrity, not financial acumen, is often the most important trait of a potential agent.

How Should the Agent Sign?

Assume Paul Newman appoints his wife, Joanne Woodward, as his agent in a written power of attorney. Joanne, as agent, must sign as follows: Paul Newman, by Joanne Woodward under POA or Joanne Woodward, attorney-in-fact for Paul Newman. If you are ever called upon to take action as someone’s agent, you should consult with an attorney about actions you can and cannot take and whether there are any precautionary steps you should take to minimize the likelihood of someone challenging your actions. This is especially important if you take actions that directly or indirectly benefit you personally.

What Kinds of Powers Should You Give Your Agent?

In addition to managing your day-to-day financial affairs, your attorney-in-fact can take steps to implement your estate plan. 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. 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. It is prudent to include in the power of attorney a clear statement of whether you wish your agent to have these powers.

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. For example, you may wish to permit your attorney-in-fact to make "annual exclusion" gifts (up to $14,000 in value per recipient per year in 2013) on your behalf to your children and grandchildren. It is important that the lawyer who prepares your power of attorney drafts the document in a way that does not expose your attorney-in-fact to unintended estate tax consequences. While some states permit attorneys-in-fact to make gifts as a matter of statute, others require explicit authorization in the power of attorney. If you have older documents, you should review them with your attorney. Because of the high estate tax exemption ($12.92 million inflation adjusted), many people who had given agents the right to make gifts may no longer wish to include this power. Others, however, in order to empower their agent to minimize state estate tax, might continue or add such a power. Finally, there may be reasons not to limit the gifts your attorney-in-fact may make to annual exclusion gifts in order to facilitate Medicaid planning or to minimize or avoid state estate tax beyond what annual exclusion gifts alone might permit.

In addition to the power of your agent to make gifts on your behalf, many powers of your attorney-in-fact are governed by state law. Generally, the law of the state in which you reside at the time you sign a power of attorney will govern the powers and actions of your agent under that document. If you own real estate, such as a vacation home, or valuable personal property, such as collectibles, in a second state, you should check with an attorney to make sure that your power of attorney properly covers such property.

---

Questions?

Speak to an Attorney Now

---

What if You Move?

Generally, a power of attorney that is valid when you sign it will remain valid even if you change your state of residence. Although it should not be necessary to sign a new power of attorney merely because you have moved to a new state, it is a good idea to take the opportunity to update your power of attorney. The update ideally should be part of a review and update of your overall estate plan to be sure that nuances of the new state law (and any other changes in circumstances that have occurred since your existing documents were signed) are addressed.

Will Your Power of Attorney Expire?

Some states used to require the renewal of a power of attorney for continuing validity. Today, most states permit a "durable" power of attorney that remains valid once signed until you die or revoke the document. You should periodically meet with your lawyer, however, to revisit your power of attorney and consider whether your choice of agent still meets your needs and learn whether developments in state law affect your power of attorney. Some powers of attorney expressly include termination dates to minimize the risk of former friends or spouses continuing to serve as agents. It is vital that you review the continued effectiveness of your documents periodically.

Age-Related Specific Components of Getting Powers of Attorney

In Your 20s and 30s

• General Power of Attorney:
  • Purpose: Useful for granting someone authority to handle your financial and legal matters while you are unavailable (e.g., due to travel or work abroad).
  • When to Get It: When you have significant financial assets or responsibilities that may need management during your absence.
• Healthcare Power of Attorney:
  • Purpose: Allows someone to make medical decisions on your behalf if you are unable to do so.
  • When to Get It: As soon as you are legally an adult (18 years old). It's particularly important if you are married or have dependents.

In Your 40s and 50s

• Durable Power of Attorney for Finances:
  • Purpose: Remains effective even if you become incapacitated, ensuring continuous management of your financial affairs.
  • When to Get It: Mid-40s, as you start accumulating more assets and your financial situation becomes more complex.
• Springing Power of Attorney:
  • Purpose: Only becomes effective upon your incapacity, providing security without immediate transfer of control.
  • When to Get It: Late 40s to early 50s, when planning for potential future incapacity.

In Your 60s and Beyond

• Durable Power of Attorney for Healthcare:
  • Purpose: Ensures your medical preferences are honored and someone you trust can make healthcare decisions if you cannot.
  • When to Get It: Early 60s, alongside a living will or advanced healthcare directive.
• Limited Power of Attorney:
  • Purpose: Grants authority for specific transactions or for a limited time, useful for managing specific financial tasks or healthcare situations.
  • When to Get It: As needed, especially if dealing with specific financial transactions or short-term healthcare needs.
• Review and Update Existing Powers of Attorney:
  • Purpose: Ensures all documents reflect your current wishes and circumstances.
  • When to Do It: Regularly, especially after major life events such as marriage, divorce, or the death of a named agent.

Final Words

Procuring and regularly reviewing and updating your powers of attorney as you age ensures that your financial, legal, and medical affairs are managed according to your wishes and by someone you trust. Starting early and adjusting your POA's as your circumstances change is an important key to effective lifetime planning.