At some point in your life you may be asked to sign a power of attorney, or POA. You may also decide that you need to create one for one reason or another. A POA can be a very useful estate planning tool when used properly; however, many unsuspecting victims are also swindled out of huge amounts of money and/or assets by executing a POA in favor of the wrong person or by signing one that gives someone too much authority. For this reason, it is important to understand a general vs. limited power of attorney. In this post we will look at powers of attorney in St. Louis MO and the uses of the two types.
Powers of Attorney in St. Louis MO
The concept of a power of attorney has been around for centuries. A POA allows you to give someone legal authority to act on your behalf. You are referred to as the “principal” and the person to whom you give authority is the “agent” All POAs have these two elements. After that, one POA can be very different from the next. Traditionally, a POA terminated when the principal became incapacitated. Because this is often exactly when a principal wants the POA to work, the concept of a “durable” POA was created. A durable POA is one in which the power vested in the agent survives the incapacity of the principal.
Beyond the durability of a POA, POAs are categorized as either general or limited. A general POA gives the agent very broad powers to act on the principal’s behalf. Though state laws may limit the authority of an agent under a general POA somewhat, an agent typically retains very broad powers. For example, if you give someone general POA the person could likely empty out your bank account, sell your home, or even entering into a contract to purchase a home in your name. Basically, someone who has your general POA can access almost all of your assets and do just about anything in your name.
A limited POA, on the other hand, only gives your agent the authority specified in the document itself. For example, you might give someone your POA so that person can attend a closing of your home while you are away on business. The POA itself should specify exactly what authority the agent has and how long the authority lasts.
As you can see, giving the wrong person a general POA can result in serious financial losses. By the same token, a mistake in a limited POA can result in the agent being unable to fulfill the purpose of the POA. If you find yourself in need of a POA at some point, be sure to consult with your estate planning attorney to ensure that the document reflects your intentions.
- What Happens When You Don’t Trust Your Trustee – Part I - March 28, 2023
- Show Your Love by Creating an Estate Plan - March 21, 2023
- What You Need to Know About SECURE Act 2.0 - March 14, 2023