Financial matters are often overwhelming to handle alone, especially when your hands are already full. As a businessman or whatever you do for a living, you’re then left with no room to attend to your other priorities. In such cases, you can execute a general (financial) power of attorney. And then, once you complete it, you’re to free some room in your hands by temporarily entrusting someone to handle your finances on your behalf. Read More
A general (financial) power of attorney is used by people who wish to assign someone to handle and decide on financial matters on their behalf. But unlike a durable power of attorney, a general (financial) power of attorney loses validity and effect on the following reasons. These reasons are when the principal becomes mentally unstable, falls into a coma, or in the event, the principal dies.
How to Execute a General (Financial) Power of Attorney
Assigning someone to act and decide on your finances, on your behalf, allows you to have some extra time to attend to other important matters. And sometimes, handling finances by ourselves, along with other pressing matters, could be stressful and frustrating. Here, listed below are the steps on how to execute a general (financial) power of attorney.
1. Assign a Trusted Agent
The first thing you should do in executing a general (financial) power of attorney is to assign someone trustworthy to be your agent. These could be a friend who happens to be a business manager, your lawyer, or anyone you know who doesn’t hold any interest in your finances. You can materialize this on paper by introducing their names and addresses, as well as yours.
2. Specify the Agent’s Powers and Authority
Next, specify the powers and authorization that you’ll grant your agent. These powers should be confined within your financial assets, such as banking, acquisition, payment of taxes, and many others. You can also authorize your agent to conduct any legal actions towards any parties acting against your interest. In assigning such authority, make sure to indicate them with your initials on the second block of the instrument.
3. Set the POA’s Effective and Expiration Date
A general (financial) power of attorney allows you to elect someone to handle your finances temporarily, on your behalf. Thus, it is essential to determine when the instrument becomes effective, and when it expires. This instrument is non-durable, which means it loses effect and validity whenever you become seriously ill or permanently incapacitated. Again, make sure you indicate these on the tool with your initials.
4. Sign and Execute the POA
After completing all the previous steps, the next thing to do is for you and the agent to sign the instrument. It indicates the principal’s blessing of the powers and authority granted to the agent, and the agent’s acceptance of the responsibilities given by the instrument. You can fix your signatures on the bottom part of the paper.
5. Have It Acknowledged
Other than the signatures of the principal and the agent, it is also vital to have the general (financial) power of attorney acknowledged by several witnesses and your local notary public. What’s more, a copy of the instrument should also be provided the public notary for them to put your general (financial) power of attorney into public records.
Frequently Asked Questions
What powers should I grant my agent in a general (financial) power of attorney?
A general (financial) power of attorney grants an agent the authority to act and decide on financial matters on the principal’s behalf. These powers are usually, but not limited to, the following.
Power to make or collect payments
Power to Aquire, Lease, or Sell Property
Power to Aquire, Lease, or Sell Real Property
Gift Making Powers
Lending and Borrowing
Power to Hire and Pay for Services
Reimbursement of Attorney-in-Fact
Power to Sue Third Parties
Safe Deposit Boxes
However, do take note that the agent cannot represent himself as the owner or act upon these powers under his name. Doing so will make the agent legally liable and will cause the termination of the general (financial) power of attorney.
Can I assign family members or relatives as agents in a general (financial) power of attorney?
Yes. You can assign family members or relatives as agents in a general (financial) power of attorney. This is as long as they’re capable and knowledgeable in managing your finances on your behalf. Furthermore, it is also important that they hold no interest to your finances and are only interested in acting on your best interests.
How long shall my general (financial) power of attorney last?
Your general (financial) power of attorney should last as long as you wanted it to. Usually, general (financial) powers of attorney often last until the principal is free or able to handle their financial affairs on their own. However, general (financial) powers of attorney usually lose effect and validity when the principal becomes permanently incapacitated or if the principal dies.
Who uses a general (financial) power of attorney?
A general (financial) power of attorney is usually used by people who wish to have someone manage their financial affairs on their behalf. These could be businessmen who are caught up with too much work or retirees who wish to enjoy retirement on other things. A general (financial) power of attorney can also be used by people who have other pressing matters to attend for the meantime, as well.
What are the limitations of a general (financial) power of attorney?
A general (financial) power of attorney is usually limited to the management of the principal’s financial estate. However, this instrument is also limited by other things as well. First, the agent is limited to act and decide within its provisions. Second, the agent can’t make any changes to the instrument. Lastly, the agent or hand the instrument to another person that the principal didn’t assign. These are to prevent the agent from abusing a power of attorney.
A general (financial) power of attorney is a big help for people with hectic and schedules. However, executing such an instrument is not as easy as it seems. Thus, you need to make sure to give a general (financial) power of attorney to someone that holds your utmost confidence and trust.