What Is a Power of Attorney?
A power of attorney is a very integral part of your estate plan. Power of attorney permits one to appoint a person or persons to handle the financial affairs on behalf of the other or it can be treated as a document that delegates the executive power. However, some power of attorney is used for short-term purposes, for example permitting someone else to handle a real estate closing for the other when he is unable to attend; most of the modern power of attorneys are “durable” power of attorneys, which provide that the document will stay in effect indefinitely, no matter even if you become incapacitated. On the other hand, many powers of attorneys go a step ahead and provide that the document will not be in effect until and unless the person is not incapacitated. These are commonly referred to as “springing power”.
Types of Power of Attorney:
- General Power of Attorney:- It is the power of attorney which is an instrument executed by the principal authorizing the agent to do certain acts in general on his behalf. If the subject matter is not general rather limited to something either specific or specifically declare by the principal while drafting an instrument then it will not constitute a general power of attorney. It is also known as the limited power of attorney.
- Special Power of Attorney:- It is a power of attorney by which a person is appointed by the principal to do some specified act or maybe acts. In this, an agent conferred with the power to do specific actions in a single or specified transaction in the name of the principal.
- Durable Power of Attorney:- A Power of Attorney which specifically says otherwise, the agent’s power ends if the principal turns mentally incapacitated. However, it may say that it is to remain in effect in the event of future incapacity of the principal. It is also known as a durable attorney.
Who should use the power of Attorney?
There are three major categories of people who should use the Power of Attorney. These are the people who wanted to make
- Authorizing to make medical decisions for the principal
- managing monetary and legal matters for principal
- Making decisions on behalf of someone who has lost their mental capacity
Important clauses of Power of Attorney, which must be entered into a POA
- Real estate and property matters
- Selling & Buying investments, operation of bank accounts
- Attorney’s powers related to conducting business
- Power to enter into agreements and registrations
- Other basic and vital clauses
Why Is a Power of Attorney Better Than a Conservatorship?
Unlike a conservatorship, a power of attorney is economical and can either take effect immediately or when an affidavit is signed later to the effect that a person is no longer capable of handling his or her affairs, without the intervention of the court. A power of attorney is more flexible than a conservatorship because you can give your attorney, in fact, whatever power you desire, also including the power to give gifts. Though sometimes such power is misused, so it is important to name only that person that you trust. Also, it is possible to involve a probate court where the party things appropriate by requesting that the attorney, in fact, should file an accounting with the court.
How a Power of Attorney significant?
It is suggested that everyone should consider having a power of attorney. Having one can be more important to your personal well being than a will. The power of attorney allows you to select someone you can trust to handle your affairs if you cannot handle them yourself due to certain reasons. It not just gives you peace of mind but also reassures you in case of an emergency and someone you choose will have the authority to act for you.
In case you don’t have a power of attorney and you are suddenly incapacitated, your legal heirs may have to go through a very expensive and time-consuming court action to appoint a guardian or conservator to make decisions on your behalf.
What are the risks associated with a Power of Attorney?
The most effective way of reducing any risk is by being extra careful while choosing the agent. Therefore, you must select someone whom you trust completely. Do not forget that you will be giving your agent the authority to access your funds at a time when you will not be able to keep tabs on what the agent is doing. So he must be very trustworthy. You can also insert ways through which other people can check up on what and how your agent is doing in your absence.
Can you manage your own affairs even after drafting a Power of Attorney?
Yes, you can manage your own affairs even after signing a Power of attorney. You are not giving up anything rather you are taking steps in present so that your agent will be eligible to act in whatever condition you have directed him to act.
Can a Power of Attorney be canceled?
You can easily revoke a power of attorney any time by tearing it up or maybe by signing a new one, or by declaring in writing that you want to cancel it. You don’t even have to give a reason for revoking it. However, it is important for you to inform the same to your agent and also to the people with whom your agent has been dealing.
Power of Attorney by Non-Resident Indians (NRI)
NRIs or any other migrant can assign any trustworthy person to fulfill his responsibility legally. Power of Attorney (PoA) can be beneficial for them by introducing assistance and convenience in selling down property disputes and exchanging old currency notes under demonetization. However But it should be duly attested from the Indian embassy.