February 29, 2024 · Insurance, Investment, Savings, Security

Talking Money with Your Family: Power of Attorney

An essential estate planning activity is creating legal documents to manage your affairs and assets

An important activity for an individual considering the future of their estate—all that they own, including real estate, personal possessions, investments, financial accounts, royalties, intellectual property and other assets—is estate planning. Strategically planning how what you legally own and control will be taken care of, either by family, friends, entities such as trusts or foundations, or by legal and financial professionals, is an essential investment of time and personal effort.

When planning your estate and what will be done with it upon your incapacitation or death, you should expect to be closely involved with many of the steps required to manage it effectively. One of the typical estate planning activities is (often, but not always) collaborating with a lawyer to create several legal documents, such as a power of attorney (POA). A POA can be very helpful in a variety of situations, some of which are discussed below. Parents (or adult children) considering setting up a power of attorney should make a point of informing family members about their actions and how they may be affected by them.

This post provides a general, limited overview of the power of attorney and offers only some information on its basic functions; it is not comprehensive and should not be relied upon for any legal advice. More detailed information about POA and how it operates within each state is available from specific U.S. state governments, state or local bar associations, or attorneys in your state.

What is a Power of Attorney document and why is it important?

A standard durable power of attorney is a planning document that authorizes someone to represent and act on another's (also known as the principal) behalf with respect to the specific powers granted in each individual power of attorney.

The individual (also known as the agent) holding the power of attorney often has:

  • The right to seek information on the principal’s activities, financial (and other types of) accounts and assets, and their possessions, including real estate properties
  • The legal authority to decide how assets will be used and take necessary actions regarding accounts and possessions.

The power of attorney must be used on behalf of a living person and is often useful when an individual, for medical or other reasons, is unable to manage their affairs.

A power of attorney terminates and is invalid upon the principal’s death; POAs cannot be used for someone who is deceased. The agent holding the power of attorney is generally trusted to make decisions and take actions that benefit the individual that they represent, and their activities could be similar to what the principal would do if they were able.

A POA is a private document that does not have to be filed in a public court to become valid for most uses. One of the most common types of POA is considered “durable” in the sense that the agent is authorized when the document is signed and the document continues to be valid and in force even if the person it represents becomes incapacitated, either mentally or physically. While creating and signing a POA without an attorney can be done in some states, the specialized knowledge and experience of a lawyer may be extremely helpful in the process.

What are the uses and benefits of a Power of Attorney?

As a planning tool, a POA—such as a durable POA—is helpful if someone wants to be prepared in case they are incapacitated either short term or long term due to a medical condition.

A POA can be used temporarily; an example would be if someone transfers to work in another country and needs someone to take over paying bills or taking care of a pet where they have their permanent home. A POA could also be used if someone was traveling frequently and needed someone to take over a task that must be done in their absence, such as selling a car or house.

Considering the significant authority granted to someone with POA, the principal should carefully consider who they are willing to entrust with managing key financial decisions and other aspects of their life.

Finding and choosing an attorney to assist with your Power of Attorney

While creating a POA document does not necessarily require the services of a lawyer, some individuals may seek out professional legal advice before, during or after the creation of a power of attorney document.

According to the U.S. government’s Consumer Financial Protection Bureau, some resources for finding a suitable attorney for your needs could include:

  • Family members, friends, work colleagues and other social or business contacts who may refer estate attorneys to you for consideration.
  • Free lawyer referral services are often available online from your state or city bar association, such as one offered by the State Bar of Georgia.
  • If affording legal services may be challenging, some individuals may qualify for free legal services through legal aid programs and agencies.
  • An attorney you know or have already worked with may be able to refer you to an appropriate lawyer.
  • For members of the U.S. Armed Forces, they can check with their local Judge Advocate General's Legal Assistance Office for advice and support.

It’s important to be thorough in researching possible legal assistance; you should carefully review attorney candidates’ credentials, then thoroughly discuss your short and long-term goals with them before coming to a decision. Keep in mind that Delta Community does not provide legal services to its members and does not refer members to attorneys or law firms.

Looking for more information on managing your financial life?

For more information that may help you manage your costs and finances, look into the free Delta Community Financial Education Center webinars on a range of practical, “how to” topics that could potentially help save you money and enable you to better manage your income, financial assets and life. Please visit the Financial Education Center's Events & Seminars page to review and register for its monthly on-demand webinars.

The Credit Union’s blog has more information that could be educational and helpful:

Can you use more financial BALANCE™?

BALANCE™ is a financial education and counseling organization that offers free services to Delta Community members. Some of its services include credit report reviews, debt management, and information on budgeting, money management and home buying.

Visit the BALANCE™ website to learn about their education and assistance programs. Members can also speak with certified credit and housing counselors to get personalized guidance.

Want to connect with a Financial Coach about your specific situation? Chat online, e-mail, or call 1-888-456-2227 to speak with a Financial Coach today.

Note that the services offered through BALANCE™ are separate and distinct from any business conducted with Delta Community and are not guaranteed by, nor are they obligations of, the Credit Union.