A Power of Attorney is a document that is often used in Estate Planning to allow another person to act on your behalf. Powers of Attorney only are in effect while you are living. Once you die, these documents and the persons acting under them lose all authority. There are also generally three types of Power of Attorney: General, Specific, and Durable.
No one is ever required to honor a Power of Attorney. Many companies do not feel comfortable with them so they refuse to honor them. Others will only honor them if you have their approved Power of Attorney form. Additionally, when they update that form they might only accept the current version.
Powers of Attorney give power to individuals you name. These individuals are known as Attorneys in Fact. Attorneys in Fact have fiduciary duties to you as their Principle. You can demand an accounting of them or even make periodic accountings mandatory. A Power of Attorney can be revoked by you at any time.
General Power of Attorney
A General Power of Attorney is just like it sounds. This Power of Attorney gives the Attorney in Fact the right to act in your name in all things. They can do anything that you are able to do. Many financial institutions will no longer honor a General Power of Attorney because they allow for abuse in some instances. The firm rarely recommends that this type of a Power of Attorney is used.
Specific Power of Attorney
A Specific Power of Attorney differs from a General Power of Attorney in that the Attorney in Fact has limited powers. The only powers that may be exercised are powers specifically outlined in the document. This is the most common Power of Attorney. Most financial institutions will accept this type of Power of Attorney.
Durable Power of Attorney
Powers of Attorney are either Durable or Non-Durable. Durable means that if you become Incapacitated the document remains in effect. The Attorney in Fact may still act and proceed as normal. A Non-Durable Power of Attorney ceases to exist once you become Incapacitated. For Estate Planning purposes the Durable Power of Attorney is most often used because we are planning for Incapacity.
Statutory Short Form Power of Attorney
Minnesota Statutes provide for a Specific Power of Attorney that has a common format. This format is readily recognized by financial institutions and most companies within the state. It may be Durable or Non-Durable. While the form is fairly straight forward, it is still recommended that you seek the advice of an attorney to draft it for you. It can allow for board powers with limited accountability if not drafted properly.
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