
What to Include in Your Power of Attorney
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What to Include in Your Power of Attorney
First, decide whether you want to prepare this document yourself or go to an attorney. Some states have generic power of attorney forms authorized by law. You might be able to find one online. Non-official power of attorney forms are also readily available online.
Things To Know
- Know the risks of doing a POA yourself.
- Consider additional powers for your POA.
The risks and why they exist
Be aware that there is a risk to doing it yourself, however. The issue with any POA is that it is presented to banks and other third parties who can arbitrarily decline to recognize it for their own reasons. This is because a party being asked to accept your POA is also taking a risk. If a person or institution has any reason whatsoever to fear "getting in trouble" for honoring the document, it might be rejected.
A stock brokerage, for example, does not want to worry about following the instructions of an agent under a customer’s POA, only to have the customer file a lawsuit later, arguing that the document should not have been honored for some reason. That’s why it’s wise to have a POA that clearly and specifically applies to each type of transaction your agent might need to conduct on your behalf. Even better, it’s a good idea to specifically name your bank(s) and other financial institutions in the POA, to make them feel more comfortable in dealing with your agent.
What to include
In addition to a wide-ranging variety of "standard" powers found in most forms, consider including the following useful provisions in your POA:
- Power to handle tax matters and deal with the IRS. In the past, the IRS has insisted that its own POA form be used. Now, a specific provision in the taxpayer’s own document, conferring appropriate authority, will be honored. Many POA forms lack this clause.
- Power to handle retirement accounts and investments. These assets are likely to be substantial. Retirement plan custodians and administrators are appropriately cautious about letting anybody else play with your money. These folks, too, will probably require specific authorization in the POA before allowing your agent to act on your behalf.
- Power to access your medical records. Even though medical issues, as such, are not addressed in a typical POA, there are situations in which your agent might need to have access to your medical and billing information. This is not possible unless you specifically authorize it.
- Compensation clause. lf your agent is a family member, instead of an unrelated professional, should he or she be paid? If so, spell it out to avoid family squabbles.
- Power to make gifts. Some wealthier folks make substantial annual gifts to family members or charity. If you wish your agent to initiate or continue such gifts, the power to make gifts should be specifically authorized and precisely spelled out.
- Power to create and amend a trust for your benefit. This allows flexibility in implementing an estate plan, despite the estate owner’s incapacity. It can be particularly useful in some situations, since a POA cannot authorize the agent to write your will.