Durable Power of Attorney, Financial Power of Attorney, Springing, Immediate…
Oh my, so many words and so much confusion! It is important to understand that regardless of whether you call it a Financial Power of Attorney, a Durable Power of Attorney or a Durable Financial Power of Attorney, the document itself is the determining factor of who makes decisions, when they get that authority and when that authority ends. Starting with the basics. The intended purpose of such a document is to allow someone to be able to access and manage assets for you; money, bank accounts, retirement accounts, life insurance, homes, land, etc. If you have a Trust, this document has very limited authority so long as the assets are titled to the Trust.
The powers of the Agent go into effect when the document says they do. For example, it might say that the Agent’s authority is effective when the document was signed. Or, it might say that the Agent’s authority is only effective when one doctor provides written evidence that the Principal is incapacitated because he/she is no longer able to manage financial decisions. The document might also say that it is effective immediately as to the Initial Agent (maybe your spouse or a child) but as to all other Agents it is only effective upon incapacity. A document that requires some event (like incapacity) to occur before it is deemed “activated” is called a springing power of attorney. Think about how you want your document set up and review it to make sure it meets your goals.
The Financial Power of Attorney must be signed by both the Principal and a witness in the presence of a notary. The witness and the notary cannot be the same person. While that might seem obvious, we have seen documents where the notary and witness are the same person. Additionally, the witness cannot be the agent, the agent’s spouse, or the agent’s children.
If your Financial Power of Attorney was validly executed in a State other than Arizona, it remains valid in Arizona.
So, what does “durable” mean in the Power of Attorney- oddly, it means that it remains valid after incapacity and does not terminate by a certain date. However, Financial Powers of Attorney do terminate at the death of the principal. Therefore, once you die, the Agent under your Financial Power of Attorney will no longer be able to act on your behalf. At your death, your Will, Trust or the beneficiary designations you have created will control the disposition of your property.
Many financial institutions have their own forms. Be sure and check with your banks and other financial institutions to ensure that your Agent will have access to your account when needed.
Written by: Emily B. Kile, Esq.