Power of attorney documents are legal forms that most people encounter at some point in time in their lives. These documents may be common, but unfortunately many people who execute power of attorney documents do not really know what the agreement actually does. As a matter of fact, power of attorney documents are some of the most powerful legal documents recognized by American jurisprudence.
Power of attorney documents are quite complex in nature. Although these documents can be drafted through an online template, if you don’t rely on the advice of a licensed attorney you could be leaving yourself and your assets vulnerable. As common as it may be, transferring power of attorney should never be taken lightly – which is why the skilled estate planning lawyers and real estate attorneys at M&A Law Firm help people with these documents every day. Understanding what a power of attorney actually does is a critical part of recognizing why it’s necessary to consult with a lawyer before putting your signature on any forms, so take a moment to read on and get a better idea of what power of attorney means.
What is Power of Attorney?
A power of attorney is a legal document authorizing one person – referred to as an agent – to act on behalf of another person in business and legal affairs. Is this may become necessary, for example, when closing on the sale of a piece of real estate or undergoing life-threatening medical procedures. Power of attorney documents, in short, give your agent the authority to make legal decisions on your behalf. This authority may be temporary or permanent, or conditioned upon the occurrence of some future event such as permanent impairment or disability. Once given, a power of attorney must be revoked in writing – and in some cases, it cannot be revoked at all.
While many of us are accustomed to authorizing people to act on our behalf’s in our daily lives, such as at the bank or with the insurance company, power of attorney can go much further. Conveying your power of attorney means transferring your right to make legally-binding decisions to another person. In some cases, such as the purchase and sale of real estate, conveying a limited power of attorney can be helpful as a matter of convenience. However, there are meaningful risks to transferring power of attorney, and before anyone considers executing these powerful legal documents he or she should take time to understand how power of attorney actually works.
How Does Power of Attorney Work?
Assigning a power of attorney is a key step in life planning, And some estate planning experts have even referred to it as “The Most Important Document In Your Estate Plan.” As critical as these documents maybe, they also carry a substantial potential for abuse. Depending upon the scope of the agreement, the agent who accepts your power of attorney may have the means to do some serious financial damage, like draining your bank accounts or selling off all of your real estate.
In Illinois, power of attorney agreements are regulated by the Illinois Power Of Attorney Act. This law exists to protect the right of every state citizen to make property, personal, financial, and healthcare decisions for him or herself. Specifically, it requires specific qualified witnesses to the signing of the document to make the power of attorney agreement effective and it clarifies key terms, such as “decisional capacity.” The law recently went through a legislative update that made the execution of a power of attorney document a bit more challenging without the assistance of an attorney, so it’s becoming harder to draft a DIY power of attorney agreement for Chicago residents. However, with the potential for fraud and abuse that these agreements carry, this policy move is probably all the wiser.
Risks of Executing a Power of Attorney
Financial abuse is a real threat – particularly among the elderly. Even though a power of attorney can be as broad or as narrow as you want it to be, if you are unfamiliar with the ins-and-outs of the laws and policies surrounding certain allowable powers, you could inadvertently assign your agent powers that you don’t necessarily want them to have. This is why it’s particularly important to have a lawyer draw those documents up for you, to make sure your requests and desires are followed.
The authority a power of attorney document conveys depends on the terms outlined in your power of attorney agreement. But basically, when you transfer your power of attorney to your agent, you sign over the right to make important legal decisions. This may be in regard to your medical care, real-estate holdings, financial investments, and so on. This is not something to be taken lightly, as you are transferring an enormous amount of power over to another person.
Having a power of attorney is critical as we plan for our golden years. These documents help us manage risk in the event of a severe illness or disability. But in most cases, power of attorney only transfers a limited scope of authority. In fact, there are few – if any – circumstances where someone can transfer their full legal rights through one all-encompassing power of attorney form. Power of attorney agreements are highly fact-specific, which is why it’s critical to discuss your plans with an attorney before executing this type of agreement.
What Power of Attorney Do I Need?
Depending on your particular circumstances, you may you may need as Durable, Nondurable, or Springing power of attorney. These categories are used for different circumstances, and the lawyers at M&A Law can help you decide which category best suits your needs. And don’t let the so-called
“easy” online forms fool you – without a doubt, you will need legal advice before transferring your power of attorney. When power of attorney agreements become necessary, contact M&A Law Firm to help ensure your wishes are fulfilled.