When Do You Need a Special Power of Attorney?
Yahoo Finance’s recent article entitled “What is Special Power of Attorney?” explains that with a general power of attorney, you can designate a person to make decisions when you are unable, due to illness or incapacity. A general power of attorney allows your agent (the person you select) to do almost anything related to your financial affairs that you could do, including, for example, file your tax returns, sell your house, access bank records, or sign financial contracts in your name. There are usually few, if any, limitations.
A special power of attorney only applies to specific circumstances. This is also called limited power of attorney. An agent named in a special or limited power of attorney can only act in situations included in your power of attorney document. Maybe you’re traveling or out of town when an important transaction need to take place. A special power of attorney is often used to sell property when the buyer or seller is unable to attend the closing in person. In a special power of attorney you can set limitations and conditions under which your agent is authorized to act.
You can have multiple special powers of attorney, depending on your situation. You may want to give one agent the power to run your business while you’re away and give another agent the power to sell your car.
Remember that a special power of attorney, like a general power of attorney, only applies during your lifetime. If the special power of attorney does not include a date when it terminates, it must end when you pass away. Your assets would then be managed pursuant to the terms of your will or trust, if you have either. If a person dies without a will, then in most cases the assets are distributed according to the probate laws of the state where the person lived.
Typically, creating special power of attorney involves the following:
- Naming a person to act as your agent
- Detailing the specific terms under which a power of attorney will take effect
- Determining which authority your agent will have
- Designating a successor agent, if necessary, and
- Choosing an end date for the power of attorney to terminate
A special power of attorney is just one of the documents you may need for your estate plan. You should also ask your estate planning attorney about a last will and testament and a living trust to help you manage assets, according to your wishes after you pass away. Other critical documents include advance health care directives which state the kind of care you should receive when you can’t make medical decisions for yourself.
For more information on other estate planning documents you may need see https://galligan-law.com/living-wills-and-medical-powers-of-attorney-why-they-are-important/.
Reference: Yahoo Finance (Feb. 28, 2020) “What is Special Power of Attorney?”