Estate Planning Power of Attorney

As the principal, as long as you have the capacity to make decisions, you can revoke your power of attorney at any time. A power of attorney can be revoked by preparing a new power of attorney, signing a Notice of Revocation, or destroying all of the copies of the previous power of attorney if they have not been distributed to the agent. Whether a Notice of Revocation or a new power of attorney should be prepared depends on the legal requirements in your state.  

Reasons you might consider revoking a power of attorney can include: 

• The incapacity or death of the agent
• Lack of agent availability 
• Per the request of the agent 
• Relationship changes, such as marriage or divorce
• The signed power of attorney document is lost 
• Moving to another state 
• Changing the terms 

A Notice of Revocation must be signed, dated and notarized. While witnessing is not typically required, it is recommended for individuals who are concerned about being challenged regarding their mental competence at the time of revocation. Notice of Revocation forms can be recorded or unrecorded, and the type of form used depends on whether the original power of attorney was recorded. If the original document was not recorded, you have the option of recording the Notice of Revocation form to prevent your former agent from taking action without proper authorization. 

Once the Notice of Revocation is signed, copies must be provided to your former agent and any person or entity that may have interacted with that agent in the past or may potentially interact with them in the future. All parties must receive a copy of the Notice of Revocation in order for the revocation to be effective. The purpose of this notification is to prevent any potential transactions from occurring between your former agent and other people or entities. This is particularly important since it is possible that you may be held liable for actions taken by your former agent despite your efforts to revoke the power of attorney. 

Individuals who are considering revoking their power of attorney are encouraged to consult with an attorney to ensure all necessary legal precautions and requirements are met. While there are programs and services that enable individuals to revoke a power of attorney on their own, it is highly advisable to work with a legal professional to ensure that the process is completed correctly. In working with a legal professional, you can also have the assurance that if your power of attorney or capacity is ever questioned, you have the appropriate representation to defend your rights. 

Sources 

“Revoking Your Durable Power of Attorney for Finances”. Quicken. https://www.willmaker.com/legal-manual/durable-powers-of-attorney-for-finances/revoking-your-durable-power-of-attorney-for-finances.html 

“How to Revoke a Power of Attorney”. Just Great Lawyers. https://www.justgreatlawyers.com/legal-guides/how-to-revoke-a-power-of-attorney 

A guardianship is a legal arrangement for an individual to make decisions on behalf of someone else. The guardian is appointed by a court and is tasked with responsibly managing various affairs of the ward, also known as the “protected person,” who is unable to make decisions for themselves. The ward may be a child or an incapacitated adult. A guardianship may be temporary (including during emergencies) or permanent, and can be limited in scope depending on the type granted, i.e., managing only a ward’s medical decisions or only their finances. In some states, guardianship may be known as a conservatorship (there is no standard legal definition for either).

Reasons for Guardianship

For children, a court may appoint a guardian if there is no parent to care for the child. In some cases, parents may name a guardian in their will to plan for childcare in the event of the parents’ untimely death. 

When an adult cannot make sound decisions — whether due to mental illness, deficiency or decline; mental or physical incapacitation; or disease — a court may appoint a guardian. 

Types of Guardianship

There are several different types of guardianship that may vary by state. The most common ones are: 

• Guardian of the Person: A more limited guardianship, excluding financial matters. The guardian is responsible for managing the ward’s daily welfare, including providing proper care, basic needs and necessities; making decisions about medical care; providing for special needs; and protecting from harm. 
  
  
• Guardian of the Estate (or Property): Tasked with managing the ward’s financial matters, the guardian oversees income, assets, property and spending. The guardian must file an annual report with the court detailing their management of the estate. If a financial power of attorney exists, a Guardian of the Estate is generally unnecessary. 
  
  
• Guardian of the Person and Property: A full guardianship in which the guardian manages the estate and the daily well-being of the ward.
  
  
• Guardian ad litem: When a ward cannot come to court or protect their interests in a court case, a judge can appoint a guardian to act on a ward’s behalf until the matter is resolved.

Guardianship account 

When a person is deemed unable to manage their finances (whether a minor or an adult), the court may order a guardian to oversee a ward’s financial assets by placing them into a guardianship account. The guardian is responsible for managing the account according to the ward’s best interest, often with specific instructions from the court, and must ensure that any income from investments or other sources is used for the ward’s benefit. The appointing court monitors the management of the guardianship account to confirm that funds are used appropriately. 

Sources 

“Purpose and Types of Guardianship”. Family Law Self-Help Center. https://www.familylawselfhelpcenter.org/self-help/guardianship/overview/purpose-and-types-of-a-guardianship 

“Conservatorship vs. Guardianship”. Legal Zoom. https://www.legalzoom.com/articles/conservatorship-vs-guardianship 

“Types of Guardianship & What Will Work for You”. Legal Shield. https://www.legalshield.com/blog/different-types-guardianship 

“Guardianship Basics”. New York State Unified Court System. https://nycourts.gov/courthelp/Guardianship/basics.shtml 

It is generally advisable to have a financial power of attorney in addition to a trust or will. A financial power of attorney is a legal document that designates a trusted individual to make financial decisions on your behalf if you are incapacitated or unable to manage them on your own while you are still alive. In contrast, a trust or will is a legal document that addresses the distribution of your assets after your death. These documents should be used together to ensure that your assets are protected in life and after you die.

Examples of situations where it would be beneficial to have a financial power of attorney in place can include severe illness, injury or changes in decision-making capacity due to aging. In these circumstances, having a financial power of attorney means that your designated agent will be able to pay bills, manage your finances and make other important financial decisions on your behalf in alignment with your preferences. If you do not have a financial power of attorney, your loved ones might have to take legal action to manage your assets. 

Since a financial power of attorney is only applicable while you are alive, your designated agent will not be able to make financial decisions or manage your finances after your death. This is another reason why a will or trust becomes necessary, since these legal documents ensure that your finances and assets can continue to be managed by someone you trust. By filing all three of these documents, you can form a comprehensive estate plan that will provide both you and your loved ones with peace of mind. 

Sources

“How Do a Last Will and Power of Attorney Work Together?” Legal Zoom. https://www.legalzoom.com/articles/how-do-a-last-will-and-power-of-attorney-work-together 

“Financial Power of Attorney: Definition, Required Forms, and Example”. Investopedia. https://www.investopedia.com/terms/f/financial-power-attorney.asp 

A financial power of attorney (FPOA) is a legal document allowing someone to appoint another person, such as a trusted family member or friend, to make decisions regarding finances and other assets on their behalf. Hiring a lawyer to draft an FPOA is unnecessary, and many states have simple forms that can be filled out online to create the document. It becomes legally binding after the form is signed, witnessed and notarized.

The scope of an FPOA can be broad or very specific. It can be used when someone cannot manage their affairs due to illness, geographical distance or incapacity. The person who grants authority is known as the principal, while the person who receives authority is known as the agent or attorney-in-fact. In certain states, a financial power of attorney is also automatically a durable power of attorney (DPOA), which means it remains in effect if the agent becomes incapacitated.

The financial power of attorney enables the appointed person — who is legally required to act in the principal’s best interest — to manage their assets, investments or other accounts as defined in the agreement. This may include paying bills, making deposits or withdrawals from accounts, collecting insurance payments, managing investments and trust accounts, making gifts or other transfers, and engaging in other financial activities.

If you appoint someone as financial power of attorney, choose someone you trust to manage your finances responsibly. This could be a family member, friend or professional such as an attorney or financial advisor. You can also name more than one person to manage different aspects of your finances.

Once you choose your agent and are ready to create the FPOA, there are a few key points to keep in mind:

1. Learn about your state’s requirements and if there are state-specific documents you should use. It’s also prudent to see if your financial institution has preferred forms.
2. Put your FPOA in writing, sign it and have it witnessed and notarized. It’s not usually necessary to file the document with a particular agency. Still, it is a good idea to share a copy with the named agent and friends or family members you want to be aware of the arrangement.
3. It’s a good idea to review the FPOA periodically to confirm everything outlined is still suitable.

With a carefully drafted financial power of attorney in place, you can have peace of mind that your finances are being taken care of even if you’re unable to do so yourself.

Sources 

“Financial Power of Attorney: Definition, Required Forms, and Example”. Investopedia. https://www.investopedia.com/terms/f/financial-power-attorney.asp 

“5 Things You Didn’t Know about Financial Power of Attorney”. Trust & Will. https://trustandwill.com/learn/financial-power-of-attorney