Financial Powers of Attorney
August 31st, 2020
What is a Financial Power of Attorney?
In a financial power of attorney, you (the principal) appoint an agent who is authorized to make decisions regarding your finances and property. This legal document states the circumstances when your agent can act on your behalf and what authorities you give to your agent. A power of attorney always terminates when the principal dies.
What is a Durable Power of Attorney?
If a power of attorney is durable, the agent can make decisions for the principal even if the principal becomes incapacitated. In Maine, a financial power of attorney is presumed to be durable unless it provides otherwise.
Can I Still Make My Own Decisions?
Granting an agent the authority to act on your behalf does not take away your rights to act for yourself. When you sign a power of attorney, you are simply authorizing another person to act for you. Your agent must follow your wishes and, if your wishes are not known, do what is in your best interest.
How Do I Choose an Agent?
There are a number of factors you should consider when choosing your agent(s). Is the potential agent responsible and organized and able to handle finances? Is he or she willing to serve as your agent? Is he or she trustworthy and loyal? You should consider naming at least one primary agent and then an alternate agent in case your primary agent is unable to act in the future. You can also name two or more agents to act together. Once you have identified a potential agent, discuss your intentions to be sure that this person understands your goals and is willing to serve as your agent.
When Does an Agent’s Authority Become Effective?
When you create a power of attorney, you decide when your agent’s authority will take effect. Powers can be effective immediately, which means that your agent can act and make decisions for you as soon as you sign the document - even though the understanding may be that the power of attorney will only be used if you are incapacitated. The other option is to give a springing power of attorney that becomes effective upon the happening of a future event, usually the incapacity of the principal as documented by a letter from a physician.
What Authority Does an Agent Have?
You may give your agent limited authority in your document. A limited power of attorney might give the agent authority only to act with regard to real estate because you will be on a trip or maybe only to pay bills while you are recovering from an illness.
Maine law distinguishes general authority from specific authority. General authority includes the power to deal with your money and property, such as the power to receive income, deposit and withdraw from bank accounts and brokerage accounts, pay bills, buy and sell investments, buy and sell real estate, borrow money, give mortgages, sign tax returns, open and close accounts, and take other steps to invest and manage your wealth. A power of attorney may also include the power to establish your place of residence and to arrange for nursing home care or in-home care services for you.
In Maine, there are certain actions an agent cannot take on behalf of the principal unless the document expressly grants that authority. These are called specific powers. Examples are the authority to create trusts for the principal, the authority to make gifts of the principal’s assets, and the authority to change the principal’s beneficiary designations. On the one hand, the specific authorities are useful powers for an agent to have, particularly if you ever face the need for expensive long-term care and your agent wants to preserve your assets. On the other hand, these are very “powerful” powers, and an irresponsible or dishonest agent could do a lot of damage. These authorities should be given only to a trustworthy agent in whom you have complete confidence.
Can I Revoke the Power of Attorney?
As long as you have sufficient capacity, you can revoke any power of attorney you have previously given. And an agent’s authority always terminates by law upon the death of the principal.
What if I Do Not Have a Financial Power of Attorney and I Become Incapacitated?
If you are unable to manage your own financial affairs, it may be necessary for your spouse, a child, a friend, or even the State of Maine to petition the Probate Court to be appointed as your conservator. This process takes several weeks, at least, and it can be very expensive. Moreover, the judge may not choose the same person you would have chosen to manage your affairs.
How Do I Create a Financial Power of Attorney?
In order to be valid, your financial power of attorney must meet strict statutory requirements. Your document must include specifically worded notices, and you must sign it as the law requires. These important documents should be prepared for you by an attorney who represents you and your interests.
This article is intended to provide information of a general nature only. It does not provide or replace professional legal advice, and it does not establish an attorney-client relationship with Maine Elder Law Firm. Please consult an attorney for advice regarding your specific circumstances
Categories: Powers of Attorney & Health Directives