Checklist for Making a Durable Power of Attorney for Finances
This is a list of steps in making a durable power of attorney for finances:
1. Create a working file to use during this process. Your working file can consist of a notebook, manila file, binder or an electronic file on your computer. Use your working file to keep a list of questions you have about making a power of attorney, make notes about what you want included in your power of attorney document, and to record advice or instructions from your attorney and other advisors about the power of attorney.
2. Before granting power of attorney, educate yourself to ensure you fully understand the implications of this type of legal document. For a list of reasons you may want to make a financial power of attorney, see financial decisions.
You should only execute a power of attorney after you have a thorough understanding of the types of actions your agent will be authorized to take and when the powers may be used. For a list of actions your agent may take after you sign this document, see agent powers under a POA. Then, review power of attorney risks, which also explains important steps you can take to protect yourself.
3. Choose the person you want to manage your financial affairs in the event you are subsequently disabled or incapacitated. Give this decision careful consideration. The person you choose will have legal control over your money and property, including your house, other real estate, bank accounts, investments, retirement accounts, insurance policies, business income or compensation, social security and other government benefits, vehicles, jewelry and other personal property, and your other assets. Your agent will also be authorized to file your tax returns and enter transactions on your behalf regarding your mortgage, credit cards, and other debts.
4. Meet with your attorney to have a durable financial power of attorney prepared. Ask your attorney to advise you on the risks and benefits of authorizing an agent to act on your behalf in the event you are unable to manage your own financial affairs due to a serious illness or incapacity. Ask your attorney to provide you a draft version to review before the date of signing. If you do not have an attorney, see finding an attorney.
5. If you plan to use a legal self help service, estate planning software or a do it yourself estate planning guide to prepare your power of attorney, read the power of attorney form in its entirety. Follow all instructions and make a note of important details. If you have questions about the power of attorney form, consult an estate planning lawyer licensed in your state. Do not rely on friends or relatives for advice about your power of attorney. Only a licensed lawyer can properly advise you about this legal document.
6. When you receive a draft of your power of attorney, read each power listed on the document. If there are any powers listed that you do not wish to grant your agent, ask your attorney to remove such powers from the document. For a list of powers you may not wish to grant, see granting power of attorney.
If you are preparing your own power of attorney, delete such powers from the document and print a revised version. While you can limit your agentís authority by removing one or more powers from the document, your agent will not be authorized to handle any matter covered by a power you remove from the document. If you become disabled or incapacitated, a court order may be required to authorize someone to handle any matters not covered by your power of attorney. See conservatorships.
7. Talk with the person you plan to appoint as your agent. Make sure he or she is comfortable assuming the responsibilities of being your agent and managing your affairs if the need arises. Serving as attorney-in-fact for another person can be time consuming, depending on the amount of property and other assets involved. Depending on applicable state law, your agent may be required to sign an acceptance of power of attorney or a similar type of document acknowledging the power of attorney. Make arrangements for your agent to sign any required documents at the time you execute your power of attorney.
8. If your lawyer drafted the power of attorney, he or she should schedule an appointment for you to execute the power of attorney in the presence of a notary and any witnesses that may be required. If you used a power of attorney form, follow all state law requirements for executing the document. Failure to comply with execution formalities can result in the power of attorney being void and unenforceable. If the form is not properly executed, banks and other financial institutions are unlikely to allow your agent to make transactions on your behalf. See how to execute a POA.
9. After your power of attorney is executed, you may want to give your agent the original to keep until such time as it is needed. If you are not comfortable giving your agent the power of attorney in advance, store the original with your other estate planning documents. Give your agent instructions on how to locate your estate planning documents in the event of an emergency. See safe deposit box for an important warning.
10. Review your power of attorney at least once every one to two years to ensure it still reflects your wishes. If you experience any major life changes, such as marriage, divorce, birth of a child, death of a family member, or a significant change in property or other assets, you may want to have your power of attorney and other estate planning documents revised. If you or your agent have questions about your power of attorney, consult a lawyer.
A durable power of attorney for finances only grants an agent authority to deal with matters involving your financial affairs. It does not grant your agent authority to make health care or medical decisions for you. For information on how to appoint an agent for health care or execute a living will form, see medical decisions.
If you are planning to establish a living trust as part of your estate plan, we also offer a living trust checklist to help you through the process of making a living trust and funding it.