Financial Power of Attorney

The thought of becoming incapacitated is incredibly upsetting. However, you wouldn’t want to leave your financial future and the future of your dependents to chance, would you? 

A financial power of attorney (POA) can be a valuable tool that can give you and your family peace of mind. In a nutshell, this document allows you to name someone who would have the authority to make some or all financial, legal, and business decisions on your behalf in the event of your incapacity. 

Given the serious nature of the document and the wide range of matters that can be addressed in it, it is imperative that you seek the assistance of an attorney to help you draft and execute a POA in a way that reflects your wishes and complies with all applicable laws. At Medley Law Firm, we understand the anxieties surrounding financial POAs and the potential risks involved when preparing this document. 

If you are considering putting a financial power of attorney in place, Medley Law Firm can help. We can walk you through the process of creating a financial POA and address any concerns or questions you may have. Call (850) 607-7890 to get started today. 

What Is Financial Power of Attorney (POA)?

A financial power of attorney (POA) is a legal document that grants an individual, often referred to as the “agent” or “attorney-in-fact,” the authority to manage the financial affairs of the “principal” (the person who creates the POA). This document is an essential part of estate planning and is particularly important in cases where the principal may not be able to handle their finances due to illness, disability, or absence. 

  • Note: Florida law allows the principal to name multiple agents, known as co-agents or successor agents under Fla. Stat. § 709.2111). 

Types of Financial POAs

There are three main types of financial POAs, each designed to suit different needs and circumstances. Understanding the distinctions between them is crucial for anyone considering drafting a financial power of attorney.

  1. General. A general POA gives broad powers to the chosen agent to conduct a wide range of financial transactions on behalf of the principal. This typically includes managing bank accounts, paying bills, collecting debts, and handling investments, among other financial decisions. However, this type of POA is often non-durable, meaning it becomes invalid if the principal becomes incapacitated or mentally incompetent.
  2. Durable. A durable power of attorney is similar to the general POA in terms of the broad financial powers granted to the agent, but with a key difference — it remains in effect even if the principal becomes incapacitated. This is an essential tool for long-term planning as it enables the agent to continue managing the principal’s finances without court intervention through periods of incapacity. Under Florida law, the person who creates a durable POA must include language that shows their unambiguous intent to grant the agent the authority notwithstanding the principal’s subsequent incapacity (Fla. Stat. § 709.2104).
  3. Limited. As the name implies, a limited POA grants the agent authority to perform only specific financial acts on behalf of the principal, rather than a broad range of actions. The scope of authority is clearly defined in the document and could include tasks like selling a property, managing certain investments, or filing taxes. Unlike general and durable POAs, a limited power of attorney may be set for a limited time and typically does not remain effective if the principal becomes incapacitated.

The attorney at Medley Law Firm can help you understand the implications of each type and ensure that the chosen POA aligns with your specific needs and goals. 

What to Include in Financial Power of Attorney

When creating a POA, it is essential to ensure that the document is clear, precise, and includes all necessary elements to be legally effective. Here are the key components you should include in a financial power of attorney:

  1. The Date of Creation 

Make sure to clearly state the date on which the document is executed.

  1. Start and/or Expiration Dates 

Define when the powers begin and when (if ever) they will expire.

  1. Your Name and Address 

As the principal, you must include your full name and current address.

  1. Your Chosen Agent’s Name and Address 

Provide the full name and address of the person you are designating as your agent (sometimes referred to as an attorney-in-fact).

  1. The Scope of the Agent’s Authority 

In this section, you need to specify the financial duties the agent is allowed to perform. This may include: 

  • Accessing bank accounts
  • Paying bills and taxes
  • Buying or selling real estate or other assets
  • Managing property
  • Investing money

Read more about the agent’s responsibilities in the section below. 

  1. Any Specific Wishes for the Agent 

Include instructions on how to handle specific issues or items, your preferences on the management of certain assets, or limitations on the agent’s powers.

  1. Your Signature and the Signatures of Two Witnesses 

The principal’s signature formalizes the document. Florida law requires the principal to have two adults witness their signature and sign the document themselves (Fla. Stat. § 709.2105). 

  1. Acknowledgement by the Notary 

A notarized POA ensures that the principal’s signature is validated, making it harder to challenge the document’s authenticity. Under Florida law, all POAs must be notarized to be legally valid and effective. 

Financial Power of Attorney’s Responsibilities 

When granted a financial power of attorney, the agent must fulfill their responsibilities and duties with diligence and integrity, respecting the principal’s best interests and preferences. Depending on the type of the POA and the language used in the document, the agent’s responsibilities may include: 

  • Conducting everyday banking: opening, closing, and operating bank accounts.
  • Transferring funds: moving money between accounts as needed for the principal’s welfare and bills.
  • Buying or selling real estate: handling the paperwork and negotiations involved in property transactions.
  • Maintaining properties: overseeing repairs, upkeep, and rent collection.
  • Handling daily expenses: ensuring utilities and service providers are paid on time.
  • Managing debts: paying down or negotiating the terms of existing loans.
  • Filing federal and state taxes: submitting annual tax returns on behalf of the principal.
  • Paying owed taxes: ensuring all tax liabilities are settled in a timely manner.
  • Representing the principal: dealing with any legal disputes or claims where the principal is a party.
  • Monitoring ongoing cases: staying informed about the status and potential impact of litigation.
  • Applying for benefits: filling out and submitting applications for Social Security, Medicare, and other government assistance.
  • Managing received benefits: ensuring proper use and continual eligibility for government benefits.
  • Overseeing retirement accounts: making decisions regarding investment options or withdrawals.
  • Liaising with retirement planners: maintaining the strategy aligned with the principal’s retirement goals.
  • Maintaining investment portfolios: buying, selling, or adjusting investment holdings as suitable.
  • Monitoring performance: evaluating the principal’s investment portfolio and making decisions based on market conditions and the principal’s risk tolerance.
  • Leasing and selling personal property: overseeing transactions to sell or lease the principal’s personal property, such as vehicles or equipment.
  • Taking inventory and safeguarding assets: cataloging personal property and ensuring it is protected from loss.
  • Making charitable donations: handling philanthropic contributions in a manner consistent with the principal’s wishes.
  • Accessing contents in safe deposit boxes: managing what is kept in or removed from safe deposit boxes.

These responsibilities require not only a keen understanding of financial management but also a resolute dedication to act solely in the interest of the principal. An agent should maintain detailed records of all transactions and decisions made, ensuring transparency and accountability.

How to Choose a Financial Power of Attorney

Choosing the agent for a financial power of attorney can be one of the most important decisions you make for ensuring your financial affairs are managed according to your wishes if you become unable to do so. For this reason, it is important to choose wisely. 

Here are some criteria to consider when appointing an agent for a financial POA: 

  • Someone who lives nearby. Ideally, your financial POA should live close to you. Being nearby means they can handle emergencies or sign documents without significant delays. A local individual is also more familiar with the community and can easily access financial institutions and resources in your area.
  • Someone you trust. Trust is the cornerstone of the relationship between you, as the principal, and your prospective agent. You need someone who will act in your best interest, manage your assets responsibly, and follow your instructions faithfully. Consider those who have proven trustworthy in past dealings, be it your family members, friends, or possibly even colleagues. 
  • Someone who is articulate and assertive. Your agent should be comfortable with financial terminology and assertive enough to deal with banks, legal professionals, and various other entities. They must be able to speak on your behalf, clearly and confidently negotiate when required, and stand firm on decisions that align with your interests.
  • Someone who will respect your wishes and preferences. It’s crucial that your financial power of attorney respects your wishes and adheres to your preferences, even if they would personally choose a different course of action. They should respect the principles you have communicated and apply them when making decisions on your behalf. 
  • Someone who has some knowledge about your financial and legal matters. The person you choose doesn’t necessarily need to be an expert but should have a basic understanding of your financial and legal matters — or, at the very least, they should be willing to learn. It can be advantageous if they are familiar with real estate, investments, insurance, and any business transactions that may be worthy of their attention when serving as your agent. 

Remember, the right financial POA will provide you with peace of mind, knowing that your finances are in capable hands. When choosing your agent, it’s a good idea to discuss your decision with them beforehand to ensure they are willing and able to take on the responsibility. You may also want to designate a secondary POA in case your first choice is unable or refuses to perform the required duties.

Financial Power of Attorney Frequently Asked Questions

Whether you are considering creating a financial power of attorney or you have just started to explore what financial POAs entail, this FAQ section aims to clarify the key concepts and questions you may have.

  • What is a financial power of attorney?

A financial power of attorney is a legal document that grants a trusted individual, known as an agent, the authority to manage financial matters on behalf of the principal (the person creating the POA) if they are unable to do so themselves due to mental or physical incapacity.

  • How does a financial POA work?

Once a financial POA is enacted, the designated agent obtains the legal right to handle specific financial responsibilities as articulated in the document. These duties may include managing bank accounts, paying bills, making investment decisions, and handling real estate transactions, among others. The extent of the agent’s power depends on the specifications laid out in the POA. 

  • Who might need a financial POA?

A financial POA could be a valuable estate planning tool for individuals who want to ensure that their financial matters are taken care of in the event they become incapacitated. This includes the elderly, those with chronic illnesses, individuals planning for potential health issues in the future, travelers, or professionals who anticipate extended periods of time away from their financial responsibilities.

  • Who can serve as the agent in a financial POA?

Any competent adult can serve as an agent, but it is crucial to choose someone trustworthy and financially savvy. Common choices for agents include spouses, adult children, other family members, trusted friends, or professional fiduciaries such as attorneys or accountants. 

  • When does a financial POA expire?

Fla. Stat. § 709.2109 lists the circumstances under which POAs would be terminated. These include the principal’s death, the principal’s incapacity (unless the POA is durable), explicit revocation of the document by the principal, and the accomplishment of the purpose of the document. 

  • Can the principal revoke a financial POA?

Yes, the principal can revoke their financial POA by (a) drafting and signing a separate revocation document or (b) executing a new POA and expressly stating that any previous POAs will be revoked. The right to revoke a POA is created and recognized by Fla. Stat. § 709.2110

Medley Law Firm: Get Help with a Financial Power of Attorney

At Medley Law Firm, we provide comprehensive legal services when it comes to helping clients prepare and execute financial POAs. We start by listening to your situation in order to understand your wishes, goals, and preferences. Then, we explain how you might benefit from putting a financial power of attorney in place and will assist you with creating a POA from scratch. With our legal guidance and support, you can take the right steps forward to securing peace of mind. Get in touch today to request a case evaluation. Call (850) 607-7890

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Medley Law Firm is an Elder Law, Estate Planning and Probate firm in Pensacola, Florida that offers in-person professional services from Pensacola to Panama City and virtually across the entire state.

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