What Makes an Effective Power of Attorney?
A power of attorney legally gives one individual the power to act on behalf of another individual. The person acting for the other individual is known as an agent or attorney-in-fact, while the other individual is known as the principal. The agent can have a range of authority, from broad legal authority to limited authority. The decisions that fall under a power of attorney include those concerning property, finances, or medical care. A New York lawyer for powers of attorney can be extremely helpful when drafting this document.
A power of attorney is often used in situations where the principal cannot be present to sign necessary legal documents, while a durable power of attorney remains in effect even when the principal becomes ill or disabled. A power of attorney can be revoked by the principal or can end when the principal dies, when a court invalidates the agreement or when the agent is no longer able to carry out his or her responsibilities. If one spouse has power of attorney for another, the document may be invalidated when the principal and agent divorce.
Specifically, a principal can authorize an agent to do the following:
- Manage your business
- Sue on your behalf
- Manage your financial matters
- Cash your checks
- Invest your money
- Collect your debts
- Apply for public benefits
- Buy or sell on your behalf
The power of attorney document specifies what powers you are giving to your agent and when those powers are to take effect. There is no specific legal requirement that a power of attorney must be prepared or reviewed by a lawyer, but it is always wise to speak to a New York lawyer for powers of attorney.
Why is a New York Lawyer for Powers of Attorney Necessary?
These power of attorney documents can be complex and if one is signed without considering the risks and alternatives, problems can follow. There are risks involved in giving someone a power of attorney since the agent is entrusted with important decisions and will have access to all or some of your property.
If an agent turns out to be less than trustworthy, serious issues can result. For example, should a dishonest agent take your money, it can be difficult or impossible to recover it unless all your bases are thoroughly covered from a legal standpoint. A New York lawyer for powers of attorney from Davidov Law Group can ensure your power of attorney document is legal and covers your best interests.
Power of Attorney vs. Health Care Proxy
In the state of New York, a health care proxy is a legal document that appoints another person power over your health care decisions. Most people will choose to appoint a trusted friend or a family member to make these important decisions. As an example, if you were injured in an accident and ended up in a coma, unable to make your own health care decisions, your agent would step in and make those decisions on your behalf. You should always make sure your agent is a person you trust to make these decisions and one that you have spoken to at length about the decisions you would choose or find acceptable.
The primary difference between a health care proxy and a power of attorney is that a health care proxy is used only for health care-related decisions, while a power of attorney can grant a broad range of authorities to an Agent, including those for financial matters, It is generally not advisable to combine the two documents into one, as some agents might not choose the same person to be their agent as well as their medical proxy.
What Does an Effective Power of Attorney Do?
An effective power of attorney can help secure your legacy, along with the following benefits:
- Instead of a court choosing who will make decisions on your behalf, you can choose who will make those decisions.
- The necessity of having to implement a guardianship or conservatorship can be avoided with an effective power of attorney.
- Putting a power of attorney in place can give you a good opportunity to discuss your wishes with your loved ones.
- When you have an effective, well-thought-out power of attorney in place, questions regarding your intent are prevented.
- Having a power of attorney in place can prevent delays in asset protection planning.
- A power of attorney can protect the agent from claims of financial abuse.
- An agent named in a power of attorney document can talk to other agencies on behalf of the principal.
- An agent can perform planning and transactions to help make the principal eligible for public benefits.
- The principal, along with his or her family members can gain peace of mind knowing it will not be necessary to go to court to seek authority to perform basic tasks.
What Powers of Attorney Cannot Do
There are certain limitations to a power of attorney document even though in general this document has robust legal rights. A power of attorney does not or cannot do the following:
- A power of attorney cannot transfer responsibility to another agent.
- The terms of the power of attorney cannot be changed or violated.
- A will or other estate planning documents cannot be changed or invalidated by a power of attorney.
- Following the death of the principal, a power of attorney agent cannot make legal or financial decisions—the estate executor will take over at this point.
- No decisions can be made by the agent prior to the power of attorney legally going into effect.
- The principal’s money or assets can not be used by the agent of the power of attorney for his or her own benefit.
- No compensation can be given to the principal beyond what is clearly outlined within the power of attorney agreement.
- A power of attorney cannot be put into place unless the principal is of sound mind and body.
Common Concerns & Considerations
While there are few downsides to a professionally prepared power of attorney, the competence of the principal at the time of writing the power of attorney could potentially be questioned down the line. Some financial institutions might require special forms, although your Davidov Law Group attorney will know whether this is the case. After six months to a year, certain institutions could refuse to recognize a document, and if the powers granted to the agent are too general, the power of attorney could be abused if the agent is untrustworthy.
How To Select the Best Lawyer for Powers of Attorney for Your Future Needs
Davidov Law Group has a depth of experience in financial matters you will rarely find, with a holistic planning view that ensures effectiveness. Our goal is always to build strong client relationships prior to making any recommendations. You can find more information in our book “Keeping it in Your Family—Protecting Your Family and Leaving a Lasting Legacy.”
How Davidov Law Group Will Protect Your Family and Preserve Your Legacy
While we all anticipate death at some point, many of us fail to realize that an illness or injury is just as likely. If you become disabled or unable to care for yourself, your intentions should be clearly stated. From financial to health care decisions, incapacity planning can encompass many important issues that an incapacitated individual and his or her family members could face. When you have a plan in place that clearly states your wishes, health care and financial decisions are less difficult for your loved ones. Disputes between family members can be minimized and harmony preserved.
Having a New York lawyer for powers of attorney prepares you for the unexpected and unknown, providing you with peace of mind and relief from the uncertainties of life. We provide compassion when it is needed, along with meticulous attention to detail. We are a family-owned firm, ready to help other families plan for their future. We have an in-house Certified Financial Planner/Attorney who helps our clients plan in the best way possible. Few firms that do estate planning have both the legal and financial expertise that we do. Contact Davidov Law Group today.