In Someone Else's Plan

I am Named as Financial Power of Attorney

A Financial Power of Attorney (FPOA) is a document that names an agent to whom you provide a variety of powers and authorities over finances and property. It does not matter if you are 18 or 80, every adult should have a Financial Power of Attorney.

If you are named as a Financial Power of Attorney, here are some important points:

  • Make sure you have a copy of the document accessible to you;
  • Read the document to know when your power becomes effective;
  • Understand what powers you have as an agent;
  • Not all FPOA documents provide the agent with the same powers

It is important that you have a copy of the document that you keep with you. This way, you always have proof that you are the named agent and able to act. It also allows you to review the document so that you know what powers and authorities are granted to you as the agent.

Types of Financial Power of Attorney Documents

The two most common versions of a Financial Power of Attorney are immediately effective documents and springing documents.

An immediately effective Financial Power of Attorney means that an agent has the ability to act as soon as the document is signed. With an immediately effective FPOA, an agent can act whenever it is necessary and step back when they are not needed.

With a springing Financial Power of Attorney, an agent can only act after the principle has been declared incapacitated. This generally occurs when two doctors or a doctor and a psychologist declare that the person is no longer capable of making their own decisions.

Limitations for Financial Power of Attorney

Just because you have a current Financial Power of Attorney does not mean that you have the authority to handle all aspects of someone’s finances.

Think of the Financial Power of Attorney as a toolbox that you were given. You only have the authority to address items specifically listed in the Financial Power of Attorney document. Those are your “tools.” If you need to do something that is not listed, either the person must be able to sign a new Power of Attorney or you may need to go to guardianship court. 

Additionally, some financial institutions may require their own in-house Financial Power of Attorney document be signed as well. If so, make sure that they are executing a Power of Attorney and are not listing you as an owner on the account. Financial institutions sometimes suggest this as an option to make things easier, but it can cause huge issues with the Estate Plan. 

The older a Financial Power of Attorney document gets, the harder it can be to use. With documents older than five years, financial institutions often fear that it may not be the most current version of the documents.

There is no law that makes Financial Power of Attorney documents expire, but in reality, financial institutions will begin to refuse it as it ages.

It is important to have a new document executed every so often, even if your loved one is not making changes, so that the document in your hand is easily honored when needed. 

Finally, it is important to remember that the role of the Power of Attorney ends upon the death of the principal. You can no longer use the document to access bank or other financial accounts even if you have a death certificate. After death, decisions surrounding the principal assets are dictated by their estate plan.

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