Financial Power of Attorney
When most people think of estate planning, they think of wills and trusts. However, a financial power of attorney (POA) is one of the most important estate planning documents you can have.
If you became disabled or incapacitated today, who would handle your financial decisions? If you have a durable power of attorney for finances in place, it means there’s a trusted person who has already been designated to step in.
Sudden illness and medical emergencies can happen when you least expect them, and our durable financial POA lawyers can help ensure that you and your family are prepared.
Understanding Financial Power of Attorney in Boston
A power of attorney for finance is a document whereby someone (referred to as the “principal”) grants a specific person (called an “agent” or “attorney-in-fact”) the authority to make financial decisions on their behalf. To be legally enforceable, the document must be executed in accordance with state law.
A financial power of attorney is critical if you want to safeguard your money. If you suddenly become incapacitated, a power of attorney document can authorize your attorney-in-fact to pay your bills and taxes, manage your business interests or rental property, and handle other financial concerns.
Without a proper POA in place, your loved ones may have to go through the court to appoint a guardian or conservator after you’re incapacitated, leaving your money totally unmanaged in the meantime.
Some of the main powers a financial power of attorney document can grant to your agent include:
- Making deposits to and withdrawals from your bank accounts
- Writing and signing checks
- Opening and closing bank accounts
- Collecting your retirement, Social Security, or VA benefits
- Paying your personal and household bills
- Filing your tax returns and paying your taxes
- Managing your business interests
- Overseeing your rental properties
- Handling any ongoing litigation
- Buying, selling, or otherwise managing stocks, bonds, and other investments
Your financial power of attorney document doesn’t have to grant your agent all of these powers. When you work with experienced attorneys from our firm, we’ll create a fully customized document tailored to your specific needs.
Types of Powers of Attorney
There are several general types of power of attorney, and each is designed for a specific situation:
Durable Power of Attorney
A durable power of attorney goes into effect in the event that you become incapacitated. For that reason, it’s an essential estate planning tool for most people.
When you create a durable power of attorney, you can decide which specific powers you want to grant to your agent. For example, some people want to create a durable power of attorney specifically for finances.
A durable power of attorney document will typically include the following:
- Information that clearly identifies you and your agent
- A designation of a backup agent
- A statement that the document will remain in effect if you become incapacitated
- Language clearly outlining the scope of your agent’s authority
If your power of attorney isn’t correctly executed in accordance with Massachusetts law, your agent may run into problems when trying to fulfill your wishes. Our team can ensure that your durable power of attorney is legally valid and will hold up in court.
Springing Power of Attorney
A durable power of attorney becomes effective at the moment it’s executed. A springing power of attorney, on the other hand, only becomes effective if you become incapacitated.
In theory, it might sound like a springing power of attorney is the best choice. After all, you only need someone to step in to handle financial matters if you’re unable to do so yourself.
However, in most cases, a springing power of attorney doesn’t spring into effect instantly. Before your agent can step in to start managing your finances or other affairs, a doctor has to certify that you are incompetent. This process can take time, and if your loved ones disagree on whether you’ve become incapacitated, a court may need to intervene. During this interval, bills may go unpaid, and financial problems can easily compound.
A durable power of attorney remains in effect until revocation or your death. It lets your attorney-in-fact continue to act on your behalf if you become incapacitated or mentally incompetent. The transition is immediate, so there’s much less risk of running into serious financial issues.
However, each person’s family and financial situation is different. If you aren’t sure whether you need a durable or springing power of attorney, we can discuss your needs with you and help you decide.
General Power of Attorney
A general power of attorney grants your agent authority to make most decisions on your behalf. If you have someone you trust to manage all of your affairs if needed, you might choose to create a general durable power of attorney.
However, not all general powers of attorney are durable. In some cases, you may need to create a standard general power of attorney that terminates if you become incapacitated. For instance, if you will be out of the country for a few months and need someone to handle your investments and rental properties in the meantime, you might create a standard general power of attorney to allow them to do that.
Limited Power of Attorney
A limited power of attorney only allows your agent to handle specific decisions. When creating your power of attorney document, you can limit the scope of your agent’s authority as much as you see fit.
If you aren’t sure whether you need a general power of attorney, a financial power of attorney, or something else, a durable-power-of-attorney attorney in Boston can help you find clarity.
Health Care Proxy
In some states, you can create something called a “durable power of attorney for healthcare” or “medical power of attorney.” Both are documents allowing you to select someone to make medical decisions on your behalf if you are unable to.
If you want to designate someone to make healthcare decisions on your behalf in Massachusetts, you must create a distinct document. You can’t just add healthcare-related language to your existing durable power of attorney.
Our state uses a document called a health care proxy. It’s the only legally binding document for healthcare decisions. If a doctor determines that you are too incapacitated to make medical decisions, your health care agent (as outlined in your health care proxy) can decide for you.
Notably, if you want to offer guidance to your health care agent, you’ll need to create another document called an “advance directive” or “living will.” This document is not legally binding, but it gives your health care agent insight into which medical procedures you consent to (or don’t consent to) in the future.
Many clients who create a durable power of attorney with us also decide to make a health care proxy. Our team can offer advice on how to choose the right agent, helping you create a comprehensive living will to guide them.
Massachusetts Formalities and Legal Requirements
Massachusetts has distinct legal requirements for different kinds of POAs. If you want your durable power of attorney for finances to be legally actionable, it must be prepared according to these instructions:
- As the principal, you must be at least 18 years old and of sound mind
- The document must be signed by two disinterested witnesses who watched you sign it
- If you want your POA to be durable, you must include specific durability language in the document
Most Boston banks will refuse to honor a POA that isn’t notarized, so statutory power of attorney lawyers generally recommend notarizing it as well.
In addition, if you want your POA to allow your agent to convey real estate, notarization is mandatory.
Choosing, Managing, and Protecting Your Agent
Making sure the legal document itself is executed correctly is important, but so is choosing the right attorney-in-fact. Here are a few tips for doing so:
- Appoint a person whom you trust to act in your best interests
- Choose someone who won’t be tempted to put the opinions of your family members above your expressed wishes
- Avoid choosing someone who manages their own money poorly
- Check to see if the person is comfortable taking on these responsibilities
- Consider choosing backup agents in the event your chosen agent can’t help
A durable or springing power of attorney lawyer in Boston can offer advice for selecting someone you trust to control your finances.
Common Uses of a Financial Power of Attorney in Boston
As elder-law power-of-attorney attorneys can attest, financial powers of attorney have many potential uses. Here are some examples:
- Filing and paying your taxes
- Selling or leasing your house
- Handling ongoing litigation
- Paying your mortgage, utilities, and other bills
- Taking care of basic household expenses
- Managing your businesses
- Managing your investment accounts
A skilled attorney-in-fact lawyer in Boston can assist you in drafting a document that outlines the specific tasks and affairs your agent is permitted to manage.
Work With a Financial Power of Attorney Lawyer in Boston
When you know there’s a trusted individual ready to step in and manage your financial affairs if needed, you can enjoy unparalleled peace of mind. Because a durable power of attorney for finances is a critically important legal document, working with a skilled attorney to establish one is non-negotiable.
At Jillise McDonough Estate Planning Law Firm, we focus on wills, trusts, powers of attorney, and other key facets of estate planning. We’re committed to building a brighter financial future for you and your loved ones. If you’re looking to create or update a power of attorney, contact us today.
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Frequently Asked Questions
Who Can Create a Financial Power of Attorney in Massachusetts?
Under state statutes, a power of attorney (financial) in Boston gives anyone the right to appoint an attorney-in-fact if they’re at least 18 years old and mentally competent.
Is Notarization Required for a Financial POA in Massachusetts?
No, but it’s highly recommended. Many banks and other financial institutions will only accept a financial POA that’s been notarized.
Who Can Serve as an Agent Under a Financial POA in Boston?
You may choose anyone who’s at least 18 years old and of sound mind to be your agent. However, you should only choose someone if you trust that they’ll act in your best interests when managing your financial affairs.
If you’re having trouble choosing an agent, a POA document preparation lawyer may be able to help you make this important decision.
Do Witnesses Need to Sign a Financial POA in Boston?
Yes, in Massachusetts, you need two disinterested witnesses to sign a durable financial power of attorney. Typically, Boston financial power of attorney lawyers recommend also having your document notarized to ensure banks will accept it.
Can a Financial POA Be Limited in Scope?
Yes. This is one of the reasons why it’s important to work with a lawyer when setting up a durable power of attorney. You can make your financial power of attorney as broad or as narrow as you wish.
Does a Financial POA End at Death?
Yes, a durable financial power of attorney allows your agent to handle financial matters on your behalf if you become incapacitated, but their authority ends when you die. At that point, the executor of your estate must take over the management of your finances.
Can a Financial POA Agent Make Gifts or Donations?
Usually, your agent can only make gifts or donations if you explicitly allow them to. They’re obligated to act in your best interests, so they may not give away your assets without your permission.
Where Should a Financial POA Be Kept?
You should keep your financial power of attorney document in a safe that your attorney-in-fact can easily access. You might also consider giving a copy of the document to your bank.
Can Banks Refuse to Honor a Financial POA?
Yes, banks may reject financial POAs for a number of reasons. If you created your POA many years ago, it isn’t notarized, or it is not detailed enough, a financial institution may not allow your agent to access your bank accounts. Some institutions may also require you to use their specific forms to assign a financial POA.
Can a Financial POA Be Revoked?
Yes, as long as you’re mentally competent, you may change or revoke a financial POA at any time. However, you must follow a legal procedure for doing so. If you want to revoke your POA, you should consult a power of attorney revocation lawyer to ensure it’s done correctly.
