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An
important part of lifetime planning is the Power of Attorney. Valid
in all states, these documents give one or more persons the power to
act on your behalf. The power may be limited to a particular
activity (e.g., closing the sale of your home) or general in its
application, empowering one or more persons to act on your behalf in
a variety of situations. It may take effective immediately or only
upon the occurrence of a future event (e.g., a determination that
you are unable to act for yourself). The latter are "springing"
Powers of Attorney. It may give temporary or continuous, permanent
authority to act on your behalf. A power of attorney may be revoked,
but most states require written notice of revocation to the person
named to act for you.
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. The same applies to 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 anyone give such sweeping authority to another person? 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
Powers 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 (e.g., due to travel, accident, or
illness) or it may be permanent.
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. People appointed in this
manner are referred to as guardians, conservators, or committees,
depending upon your local state law. If a court proceeding,
sometimes known as intervention, is needed, than you may not have
the ability to choose the person who will act for you. With A Power
of Attorney, you choose who will act and define their authority and
its limits, if any.
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