Financial power of attorney (POA) was created for those times when you’re unable to take care of your own finances due to extenuating circumstances.
What’s the Use for Finances?
Usually, power of attorney is executed by an agent that you have selected to act on your behalf.
This agent must present the document to the relevant third party by whom it’s required as evidence that they have the authority to perform such activities as set out in the POA, such as signing real estate contracts or withdrawing money from a bank account.
With that said, this doesn’t remove your legal obligation to the third party who now has to deal with your POA agent.
When Does It Become Effective?
A power of attorney is typically effective immediately, but in some instances, it can only become effective upon some future event that’s set out on the document.
If the wording of the document says that it’s effective immediately, this means that your POA can act on your behalf even if you’re available and capable. For instance, let’s say you’re out of town and need to sign a document urgently. If your agent’s POA is effective immediately, they can sign on your behalf.
On the other hand, if a POA’s wording says that it’s only effective at some future event then it can only be applied when that event takes place.
An example of such an event would be either mental or physical incapacity as certified by a physician. This sometimes happens when someone is in a coma or is suffering from a condition like Alzheimer’s, for example.
Make the most of your POA in such instances by getting valuable advice from Big Law Investor.
When Does It End?
A power of attorney becomes null and void when the principal dies. Also, unless otherwise stated, the POA may also end when the principal is incapacitated.
But, there’s something called a durable power of attorney (DPOA) which remains even after the principal’s incapacity. This means that the guardian of your property doesn’t have to appoint someone else to be your POA.
POA authority also ceases when revoked by the principal, invalidated by the court or if you lose association with the agent through divorce or death, for example.
Power of Attorney with Third Parties
It’s important to note that a third party isn’t obliged to access the power of attorney.
But, this also depends on your state, because some states have regulations that penalize third parties who fail to recognize or accept power of attorney, especially if it’s done using an official form of the state.
A great way to ensure that your power of attorney is accepted is to contact any and all relevant third parties that your agent will have to deal with so that they are familiar with him/her.
That way, they’ll have no choice but to accept your POA.