A Power of Attorney (“POA”), is legal document that allows you to name one or more persons to help you handle your financial affairs. It is an essential part of your estate planning.
Despite popular belief, estate planning is not limited to figuring out how to distribute your stuff after your death. It also includes planning for the chance that you might be incapacitated at some point in life. If you are incapacitated, it means you lack the mental or physical capacity to sufficiently care for yourself or your property. Incapacitation can be temporary, intermittent, or permanent.
You might be temporarily incapacitated physically if you are traveling abroad for an extended period of time. You might be physically and/or mentally incapacitated following a medical procedure. In some cases, a doctor would conduct a psychological exam to determine whether you are mentally incapacitated. In other cases, incapacity may be obvious based on your inability to communicate, if you were in coma, for example. If you become incapacitated, there are acts and decisions related to your finances that must be made on your behalf, such as paying your bills, managing your investments, and possibly employing various service providers.
That is where the need for a financial power of attorney prepared by an estate planning lawyer with knowledge of the laws in your state comes into play. Every state has different rules regarding the proper execution of a POA and if the rules are not followed then the POA may not be honored by third-parties or enforceable by law.
With a financial POA, you appoint an agent, the person you give the power to handle your financial affairs. You can limit the power and only allow them to do specific things or you can give them power over everything, including but not limited to the power to sell, rent, or mortgage your home, pay your bills, cash or deposit checks, buy and sell your investments, or manage your personal items. However, a financial POA document does not give someone the power to make medical decisions on your behalf. In Georgia, that power is given through an Advanced Medical Directive.
There are three main advantages to executing a financial POA:
1. You Have the Power: You decide who your agent will be. You decide which powers to give your agent and you decide when the agent’s power starts and stops. You can make the POA effective immediately, provide a specific start and stop date, or have a start date that is triggered by a future incapacity. Even with a POA in place, you can still handle your own financial affairs as long as you choose to or are able to. More importantly, you may cancel or revoke the POA at any time.
2. It’s Quick and Easy: You don’t have to go through all of your finances and assets. All you need to know is who you want to appoint as your agent and which powers you would want your agent to have. Once your estate planning lawyer understands your wishes, your FPOA can be drawn up and executed or you can wait and execute it with all of your other estate planning documents.
3. You Can Avoid Probate Court. If you become incapacitated and your family cannot agree on who will manage your finances, they could end up in probate court asking a judge to appoint a guardian or conservator for your property. Since court proceeding are public, if they go to court your personal affairs will be public. Plus, the legal dispute could cause an irreparable rift between your family members. In Georgia, you can avoid this by making sure your financial POA is durable. If you have a durable financial POA in place, your family can save a lot of money on the legal expenses associated with probate court and lawyers, keep your affairs private and avoid internal fighting over who has the power to manage your stuff.
Your POA will remain in effect until your death, even if you become incapacitated or unable to communicate your wishes, unless: (1) a guardian/conservator is appointed for your property, (2) you include a date or specific occurrence when you want your POA to be canceled, (3) you revoke your agent’s power, or (4) your agent and all successor agents die before you. Upon your death your POA will be canceled and your Last Will and Testament will govern the distribution of your assets.
If you have questions about your estate plan, need a power of attorney, or need assistance with estate planning generally, you can contact us. We help clients across the state of Georgia and would love to help you.
Simmons Rogers, LLC
Simmons Rogers, LLC is a full service civil law firm based in Atlanta, Georgia. We provide legal services as well as mediation and arbitration services, to businesses and individuals throughout the state of Georgia and beyond.
This blog is not intended to be a complete explanation of the law. Its purpose is to inform, not to advise on any specific legal problem or legal rights. If you have specific questions regarding any topic in this blog, you are encouraged to consult the Atlanta based law firm of Simmons Rogers, LLC or an attorney licensed in your