How Much Power of Attorney Should You Give to Your Attorney-in-Fact?
One of the most important considerations in creating a power of attorney is how much power you must grant your attorney-in-fact or agent to protect your properties, finances, and interests from abuse. Since the courts do not regulate powers of attorney, the powers may be misused by an attorney-in-fact. As a principal, you do not want this to happen, which is why you must choose carefully the powers you are going to give to your agent.
You have to decide one or more of the following tasks that your attorney-in-fact will carry out on your behalf from time to time:
• manage your properties
• preparing and filing income tax returns
• making decisions regarding health care
• do transactions at the bank and pay your bills
• handle your retirement and insurance benefits
• collect your social security benefits
• handle your legal claims
You have two options when deciding how much authority you are going to allow to your agent. You can give either a general or a limited power. The right choice depends on your needs and preferences when it comes to managing your affairs.
General powers of attorney provide more authority to an attorney-in-fact than the limited type. Because the control granted to an agent is limitless, the general type has a wider scope than the other one. This means that the agent enjoys the same amount of privileges and access to the assets of the principal. For example, the agent can have access to the safety deposit box of the principal and transfer sales or investments, among other powers.
Entrusting all your assets and personal affairs as a principal is like entrusting your life to your attorney-in-fact. Your agent’s decisions regarding your estate will have a direct impact on you, considering the broad freedom granted by general powers of attorney. The agent will decide, for example, where your money and investments will go as well as the kind of nursing home where you will stay.
Simply put, your attorney-in-fact will be in charge of everything that concerns your life as soon as you become mentally incapacitated. That being said, you must make sure that you appoint someone who is worthy of your trust. Your agent can be your relative or trusted friend who can handle well all concerns regarding your finances and other affairs.
However, if you are not confident about entrusting everything to someone else, you may consider giving a number of limited powers of attorney rather just one general power.
As the term implies, limited powers of attorney grant limited and specific control of an attorney-in-fact over the estate of the principal. With such type of power of attorney, a principal can prepare for certain situations without giving full authority to his or her agent. There are various types of limited powers of attorney. Your choice depends on what aspects of your life need important decisions from someone when you are not able to make decisions for yourself.
Some of the limited powers of attorney involve health care, real estate, medical, and financial.
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