Financial Power Of Attorney

Financial POA Guide
Power of Attorney Types
Durable Power of Attorney
Choosing Powers of Attorney
Financial POA Problems
Financial Power of Attorney FAQ’s

Financial POA Guide

A Financial Power of Attorney is a document created to appoint an individual or organization to handle your financial and other affairs if you become incapacitated or are otherwise incapable of making financial decisions on your own. With a properly designed and implemented Financial Power of Attorney you, not the court, chooses the person authorized to make important financial and legal decisions on your behalf. This is extremely important because without such a legal document, the court could very well appoint someone you do not trust or simply don’t want to make these decisions.

A Financial Power of Attorney can provide broad and extensive powers to make decisions on your behalf, including:

  • Filing of tax returns
  • Buying and selling real estate property
  • Managing property
  • Picking up mail
  • Entering safe deposit boxes
  • Acquisition of life, health, and automobile insurance
  • Settling claims
  • Entering into contracts
  • Managing stocks
  • Operating businesses
  • Transferring assets to a Revocable Living Trust

Determining the best person to serve as your Financial Agent is obviously an important decision.

Power of Attorney Types

In the state of Arizona, there is a “springing” power of attorney and a “durable” power of attorney.

  • Springing: This power of attorney form only takes effect if you are determined to be mentally incapacitated. At this stage, you are no longer able to manage your finances or make healthcare decisions for yourself. A springing power of attorney agent has no legal authority over your assets until it is determined you are mentally incapacitated. One disadvantage of naming a springing power of attorney is that payment of bills and investment of assets have to be delayed until all requisite documents confirming your mental incapacity have been signed.
  • Immediate: This takes effect from the moment you sign it. An immediate power of attorney provides your designated agent the authority to manage, control, and sell your assets on your behalf. This speeds up the process of paying bills and asset management, but you need to have complete trust in the individual chosen as your durable power of attorney agent.

It is always best if you hire an experienced attorney to prepare documents for naming a power of attorney. You should go through the process with your attorney to ensure you understand what it entails.

Durable Power of Attorney

A Power of Attorney legally authorizes someone to act on your behalf, either financially or medically. This person is your agent and through this legal document has the authority to perform any action you would, such as signing checks, selling real estate, running a business, or making medical decisions. Your attorney works with you to make the document as broad or as narrow as you choose, ensuring your agent acts only within the scope of the document. In a regular power of attorney, this relationship ends when the purpose is fulfilled, or upon your incapacitation or death. A Durable Power of Attorney serves the same function, but it remains in effect even if you become incapacitated due to illness or injury, making it an important estate-planning tool.

Preferably, you will have two Durable POAs: one that covers your healthcare wishes and another to address your financial assets. In the event you become incapacitated, your agent continues acting on your behalf. This protects you and your family from the court deciding who makes these decisions for you, ensuring your family’s needs continue to be met. The Durable Power of Attorney ends upon your death.

Durable Medical Power of Attorney

A Durable Medical Power of Attorney is a document that details your wishes for health care in the event you become injured or too ill to speak for yourself. Also called a Durable Power of Attorney for Health Care, this legal document names the person you trust to act as your agent to make health care decisions in your stead.

Your agent works with your physicians and other healthcare providers to ensure your medical wishes are granted. To ensure your wishes are followed, openly discuss them with your agent as well as your family and primary care physician. The document can be as specific as you choose.

Including this document in your planning saves your family from enduring a stressful, expensive Guardianship proceeding, in which the court determines who makes these medical decisions if you become incapacitated.

Durable Financial Power of Attorney

A Durable Financial Power of Attorney gives your agent the authority to handle financial transactions on your behalf, even if you become incapacitated. Though some powers of attorney are limited in scope, such as appointing someone to handle a single real estate transaction, a Durable Financial Power of Attorney is a comprehensive legal document naming a person you trust to act as your agent to manage any task you yourself would handle were you not incapacitated.

Tasks you may include in a Durable Financial Power of Attorney include depositing and writing checks, opening mail, completing tax returns, and talking to government agencies or financial institutions on your behalf. Your agent may choose to hire professionals to assist in handling some of these transactions, using your assets to pay for their assistance.

Why You Need Both

Separate documents are not only recommended by legal professionals, but also preferred by clients. This is due to confidentiality and preferences. Your Durable Health Care Power of Attorney likely has details you prefer to not share with your financial agent, just as your Durable Financial Power of Attorney likely has details your health care providers do not need to see. People may choose the same or different agents for each document.

Divorced Women

For a woman who is not the primary breadwinner in a marriage, it is important that she understand her worth within the family and the home. Marriage is an economic partnership, and anything owned or acquired during the course of a marriage is subject to equal division between the two spouses. Problems often arise when women allow their husbands to complete the financial planning, and are then economically paralyzed after a divorce. Women should not only take part in the financial planning, but also have their own estate plan in place.

When to Prepare a Durable Power of Attorney

Preparation of your Durable Financial and Medical POAs should take place at the beginning of your estate planning, while your health is still good. If you become incapacitated or deemed incompetent without drafting a Durable Power of Attorney, your family may not make financial or medical decisions without court approval. Your Durable Power of Attorney may be written so that it goes into effect immediately, or you may choose to delay its application until you become incapacitated. Although it remains in effect until your death, you may revise or revoke the document at any time so long as you have mental capacity to do so.

Unfortunately, these documents are often underutilized by young adults. As parents are no longer allowed to make decisions once their child becomes an adult, it is important for young adults to create these documents. These basic estate planning documents make great graduation gifts!

When it comes to estate planning, financial and medical powers of attorney ensure your wishes are honored. However, questions abound such as how do you choose an agent?

Tips on Choosing Your Powers of Attorney

Becky Cholewka: One of the things we ask people to think about, before they come in and meet with us, is give some thought to who you want to choose to act for you in certain situations.

For example, who do you want to make medical decisions for you if you’re not able to make them for yourself? That would be your mental health care and healthcare power of attorney. We oftentimes get clients in here who just want to choose their oldest child, just for the mere fact that they’re the oldest child.

I always encourage people to think about what that person needs to do. They need to be good in a crisis situation. They need to be able to talk to doctors and nurses and understand medical information. They need to be able to talk to other family members, to be able to keep other family in the loop.

They also need to be able to make sure that they can stand up for you to a doctor, and encourage a doctor to follow your wishes- for example, from a living will.

It’s not just about who’s the oldest, but really who has the best skill set to be able to make those decisions for you in a crisis situation. It is super important to ask yourself these questions and think about the answers before you choose anyone legally.

Financial Powers of Attorney Problems

Interviewer: What problems are you seeing with financial powers of attorney?

Interviewee: Financial powers of attorney right now are giving estate planning attorneys a lot of grief across the country. We talk about this a lot with other attorneys. Banks, right now, at least here in Arizona don’t like them.

What they’re telling their clients is, “You know what? Why don’t you go to court and have the court tell us what to do.” That’s just because we don’t have strong laws here in Arizona that says, “Bank, if you don’t use this Power of Attorney when someone takes you to court, you have to pay all their attorney’s fees and costs.”

We don’t have that in place. Banks are taking the cautious road and are just saying, “Go to court first and then bring that court order back to us.” Those very simplistic Powers of Attorney that you see that are even from the state website, they generally don’t work.

They need to be comprehensive financial powers in order for financial institutions to really accept them.

Financial power of attorney FAQ’s

This Arizona Power of Attorney FAQ answers the more common questions (hence the title, FAQ). However, if you want further information, feel free to contact the team at Cholewka Law, or leave a comment below for us to answer.

A Financial Power of Attorney is a document created to appoint an individual or organization to handle your financial and other legal affairs.

If you POA is durable, it allows your agent to make decisions for you even if you have become mentally incapacitated.  

Arizona law allows any person over the age of 18, who is of sound mind, to have a power of attorney.

The Principal is the person drafting the POA and granting authorization for an agent to act on his or her behalf.

The attorney of fact is the person you choose to act as your agent or representative in a POA. This person does not need to be an attorney; he or she simply represents your interests.

No. The requirement in Arizona is that the witness cannot be the named agent, the agent’s spouse, the agent’s children or the notary public.

There are many reasons you might need a power of attorney. A durable POA, especially, protects you and your assets in the event you become incapacitated and are no longer able to manage your affairs. This includes tasks such as selling assets and paying bills.

After authorizing your power of attorney, your attorney may record it with the County Recorder. This makes your POA public record, which means anyone looking for it, such as your bank, easily finds it. It also ensures your agent’s ability to prove his or her authority to act on your behalf.

Once the power of attorney is signed and notarized, it becomes effective, unless the document states otherwise. Once you give the POA to the person you name as agent, he or she may use it. Choosing the right agent protects you.

In your power of attorney, you specify which actions you authorize your agent to perform, and when those authorizations take effect. You may make broad provisions, as well, such as “managing financial affairs” or limited provisions such as “ability to sell real property.” In Arizona, however, most provisions require specificity in order to be effective.

No, you retain control over all of your property, including finances, though your POA gives your agent access to said property. That means that an unscrupulous agent may take advantage of this authority.

Yes, if the POA is an immediate power, rather than a springing power, and grants power to sell property. Even though your POA is little more than a piece of paper, in reality it is the equivalent of trusting that person with your property.

Yes, your POA does not take precedent over your own decisions. If you and your agent disagree, you have final say. However, if your agent acts on your behalf and then you disagree, the agent’s action stands unless they have acted criminally. If your agent disrespects your wishes, you may revoke the POA at any time.

Your first step is talking to your attorney and revoking the power of attorney. Next, notify all financial institutions that the POA that it has been revoked.

From there, you and your attorney can file a demand with the probate court, requiring the agent to file an accounting of your money and property. The court schedules a hearing and, if it finds that the agent stole from you, you may sue and/or press criminal charges.

Yes, you may, but that does not necessarily mean that you should. Confusion and conflict are not uncommon in these situations. Before assigning more than one agent, discuss the pros and cons with your attorney.

You may also assign a secondary agent who takes over for the primary agent. Typically, you would name this person to serve in the event your first choice predeceases you.

No, Arizona does not require an attorney to complete or file these documents. However, financial and medical powers of attorneys are often complicated and complex documents, bestowing a great deal of power on an individual.

A springing power of attorney is called that because it “springs” into action if you become incapacitated. Only at that point can your agent act for you.

A durable power of attorney can be effective as soon as you sign the document and continues to be effective if you are incapacitated.

Because they are different documents that do different things. A trust gives someone the ability to manage your trust assets if you are incapacitated and when you die. A will distributes your probate assets to your beneficiaries after you have died. A power of attorney protects you while you are alive, by allowing someone to manage your non-trust assets and make your healthcare decisions if you can no longer make them yourself.

Your estate plan documents can include who determines if you no longer have the capacity to make decisions, such as your spouse or your attending physician. Otherwise, a court can make that determination. People can express their wishes in advance in case they become unable to make medical decisions. For example, a living will includes advance medical directives to follow.

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