An important part of estate planning and financial planning is creating a power of attorney. Your power of attorney (POA) is a document that names an “agent” or “attorney-in-fact.” This person will be able to make decisions on your behalf under certain circumstances.
Making your POA must be done properly to keep potential problems from arising. Watch out for these three mistakes that could cause trouble down the road:
- Giving your agent joint ownership of your bank account
There’s a big difference between allowing your agent to use your bank account on your behalf, and making them a joint owner. Often, people mistakenly give their agent joint ownership of the contents of their bank account. It’s an easy mistake to make and happens often.
Even though you likely trust your agent not to use your money as his or her own, having them as a joint owner means your money could potentially be used to pay your agent’s personal debts. It will also complicate the distribution of your assets after your death.
- Leaving out types of property
On the power of attorney document, you will find a list of types of property you can choose to give your agent power over. Many people only mark the types of property that they currently possess at the time when they are creating the document.
Just because you don’t have “digital property” or “stocks and bonds” now, doesn’t mean you won’t in the future. In preparing this document you will need to consider the assets you want controlled by your agent, whether now or in the future.
- Waiting to use it
A power of attorney can either be springing or current. It if is springing it becomes effective on your incapacity. In other cases, your power of attorney can be used right away. You will need to consider the purpose of the power of attorney to determine if a springing or a current power of attorney is appropriate for you. Most people chose to use springing powers of attorney or put limits (giving authority only for a specific period of time or for a specific transaction) to limit the control their agent has over their assets and limit their exposure but there are times when a current power of attorney are appropriate.
How do I create my power of attorney?
An experienced lawyer can help you avoid these and other pitfalls when creating your power of attorney. The attorneys at Solan, Park & Robello are eager to help you with this process. Do you have questions about power of attorney? We offer free 15-minute telephone consultations! Give us a call at (415) 777-3300
Solan, Park & Robello
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