Financial Powers of Attorney
A financial power of attorney relationship is created by a written document. You (the principal) appoints an agent to act on your behalf. This permits the agent to enter into agreements on your behalf for personal, financial, business, and real estate purposes. Because of this, you want your agent to be someone you trust. Powers of attorney are revocable by the principal. Powers may also be invalidated due to life-situations such as a divorce.
Drafting Powers of Attorney
In a financial power of attorney agreement, the powers an agent has can be as broad or as narrow as the principal wants. They can include managing assets such as real estate, personal property, stocks, and bank accounts. An agent may also act on behalf of a principal for business management, litigation, and trust agreements.
When Effective
The powers given to a financial power of attorney can become effective immediately or can occur after a specific date or occurrence. In situations where the principal becomes incompetent or incapacitated, powers can remain indefinitely so long as specific language is in the document allowing this to occur. If a power of attorney remains effective in these situations, the agent is said to have a durable power of attorney.
Financial powers of attorney can be part of a comprehensive family wealth management plan. Specifically, a power of attorney aids in emergency situations. They will make decisions for the principal. Having a properly written power of attorney provides you and your family members peace of mind.
Medical Powers of Attorney
If you become incapacitated, you should designate someone to make medical care decisions. In order to have a trusted friend or family member act on your behalf concerning medical care, you will need to execute a healthcare power of attorney. This is a document that allows a trusted person to make decisions for you in the event you find yourself unable to communicate due to health reasons. This trusted person is considered your agent.
POA vs. Living Will
A good healthcare power of attorney document works hand-in-hand with a living will. In Ohio, your living will dictates how a power of attorney must act in certain situations. Therefore, it is wise to have your appointed agent review and understand your living will to ensure that any clarifications can be made ahead of time.
The Right Agent
Your healthcare agent should be someone you trust and someone who is comfortable with following through with the directives you desire to create. This means that it should be someone who lives near you and can handle dealing with the opinions of others. You may create your healthcare powers of attorney years in advance. Therefore, you should name a backup agent in the event your first choice is unavailable.
State law may prevent you from naming your ideal choice for your agent. For example, if your agent works for your healthcare provider, the law may prevent them from acting on your behalf. Likewise, if someone is already an agent for multiple people, they may also be unable to act for you.
Why you need one . . .
A healthcare power of attorney is one piece of a comprehensive estate. It ensures others know your desires and your wishes when you are unable to clearly communicate them. Putting together a comprehensive plan for care allows those around you to act as closely to your directives as possible.
Hot Powers
Ohio’s law concerning powers of attorney changed less than five years ago. With these changes came new issues to contemplate in creating your family wealth plan. Changes to Ohio’s law have clarified powers of attorney. Although, best practices dictate this so other states clearly understand your POA in an emergency.
Hot vs. Cold.
Ohio’s powers of attorney law distinguish “hot powers” from other standard powers for agents. Generally, a hot power is one that, when used, materially affects your assets or control by the POA. Because these powers can greatly affect you and your assets, the POA places it in a separate section.
Examples of hot powers can include the power to make gifts, change rights of beneficiaries, and change living trusts. A hot power may also allow an agent to name a sub-agent to delegate authority. You must put these powers in writing indicating how broad or narrow you want these powers to be.
Consider these POAs. . .
Hot powers are important topics to consider when evaluating your power of attorney document. Be sure to discuss the ramifications of issuing a hot power with a professional. A hot power, although helpful, cause problems if you do not have fully thought out family wealth plan.