The Importance of Having a Power of Attorney: How can it help you in a time of crisis
on 12/2/2021 by Nathan Schroeder
Given the ongoing public health crisis, many people are giving thought to preparing a trust or will, however, also very important to your estate plan is having a proper power of attorney. Below is a set of questions and answers that help explain the operation and utility of a power of attorney.
What is a power of attorney?
A power of attorney (POA) is a legal document that allows another person, your “agent”, to act on your behalf with regard to your financial affairs. The POA allows you to choose which particular powers you give to your agent and which you do not. For example, the power of attorney could be limited to just allow your agent to pay monthly bills and as broad as allowing your agent to make investment decisions or control your business decisions.
By contrast, if you do not have a POA in place and you become unable to manage your affairs, a Conservatorship will need to be opened and a Conservator appointed, which can be a lengthy, contentious, and expensive legal process. Further, when a Conservator is appointed they may be given much broader control over your affairs than you would have granted under a POA.
I do not want to give up managing my finances so why do I need a POA?
Having a power of attorney does not mean you are giving up control over your finances. In most cases, the purpose of a POA is for situations where you become sick and cannot handle your financial affairs. In fact, you can chose when your POA becomes effective. In most cases, you can specifically require that your agent obtain written approval from a medical provider that you are no longer able to manage your affairs, which is sometimes referred to as "springing power of attorney"
Who should I pick as my agent?
People generally choose their spouse or a trusted family member or friend. You may also choose a successor if your first agent is unavailable. You may also pick more than one person to act at one time; however, you must choose if they need to act together or can act separately.
Why is having a POA important?
If your POA is “durable”, it will allow your agent to handle your affairs in the event you are no longer able to do so due to accident, illness, or other cause. Without a POA, someone would need to be appointed as a Guardian of your property by a court, which can be a complex and contentious process.
Can I revoke my POA?
POAs are revocable at any time. You should seek legal assistance to make your revocation effective, because a financial institution may still honor your POA if they haven’t received proper notice of its revocation.
Does my agent have to sign the POA?
No, Iowa law does not require your agent to sign the POA, however, it is important for you to inform your chosen agent where your POA is located in the case they need to act on your behalf. In addition, it is helpful to have your attorney explain to your proposed agent what their duties and responsibilities are when acting as an agent under a POA.
I have a POA from ten years ago—is it still valid?
As long as the POA was properly executed on a valid form at the time, the POA is still valid today. You should consider doing a new POA, however, because the Iowa statutory form has changed and the new form is most recognized by financial institutions.
What if I don’t have a POA?
If you don’t have a POA, the attorneys at Dutton Law Firm would be happy to assist you in putting one in place. You may contact attorney Mary Rose Shelley at MShelley@duttonfirm.com or 319-234-4471 or any of Dutton Law Firm's Estate Planning Attorneys.
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