Life can be unpredictable. Think of it you becoming ill or facing an accident and are unable to manage your affairs? One way to prepare for the unexpected and ensure peace of mind is by setting up a power of attorney (POA).
A power of attorney is a legal document that enables you to designate a trusted person to make important decisions on your behalf if you become unable to do so. This person, known as your agent or attorney-in-fact, will have the authority to manage your affairs according to your wishes.
Anyone can face sudden illness or injury. By creating a POA, you take proactive steps to ensure that someone you trust has the power to act on your behalf, safeguarding your interests when you cannot.
Here’s a guide to help you establish a power of attorney effectively.
Types of POA based on authority
Before applying for a POA, it is crucial to know the types and other mandatory things. Based on the authority, you have two options of POA:
General POA- This grants broad powers to the agent.
Specific POA: This limits the agent’s powers to specific acts or transactions.
Under these option, the Powers Granted are listed below:
- Managing real estate
- Handling bank transactions
- Making investment decisions
- Conducting business operations
- Filing taxes
- Making legal claims and defenses
- Personal and family maintenance
- Health care decisions (if included, sometimes a separate document)
Steps to create a Power of Attorney in India:
1. Decide which type of Power of Attorney to make
There are several types of POAs, each covering different aspects of your life:
Durable Power of Attorney: This type remains effective even if you become unable to make the decision, ensuring your agent can continue to act on your behalf if you cannot make decisions yourself.
Springing Power of Attorney: Only becomes effective when a specified condition is met, like you become unable to make decisions. It can be tricky to determine when these conditions are met, so it’s less commonly recommended for estate planning.
General Power of Attorney: It grants your agent broad authority to act on your behalf in all matters allowed by law, including legal, financial, health, and business decisions.
Financial Power of Attorney: A limited POA that specifically authorizes your agent to manage your financial matters, such as paying bills, handling bank transactions, and filing taxes.
Medical Power of Attorney: Another type of limited POA, this authorizes your agent to make healthcare decisions on your behalf, including medical treatments, medication, and surgical procedures.
While online POA templates exist, it’s highly recommended to consult a lawyer.
They can help you understand the types of POAs and choose the right POA. They can recommend the one that best suits your needs and circumstances.
2. Choose your Ideal Agent
The person you choose as your agent is critical. They will be entrusted with your money and legal affairs. They may also make your healthcare decisions, depending on your POA.
Your agent should typically be at least 18 years old, but check your state’s specific requirements. Choose someone you trust to act in your best interests and who is capable of making difficult decisions.
Potential candidates, you can consider:
Spouse or Partner: A common choice, especially for a general POA.
Adult Child: A mature and responsible child can be a good option.
Close Friend or Relative: Someone you trust implicitly and who understands your situation.
Lawyer or Financial Advisor: For complex legal or financial matters, a pro can help. They can provide expert help.
3. Define what powers you want to grant to your agent
Medical Decisions: Specify treatments, medications, and names of healthcare providers.
Financial Decisions: This includes managing bank accounts, paying bills, handling real estate, and making investments.
Other Specific Powers: This covers any additional powers related to your business or personal affairs.
4. Obtain and Complete the POA Form
Get the appropriate form for your needs. Many states offer free POA forms, which may be more rigid.
Some Paid services provide customizable forms to fit your specific needs.
Some platforms offer free tools to create POA forms, especially for durable financial and medical powers of attorney.
5. Sign and Notarize the Document
Most states require your signature to be notarized.
Some states require one or more witnesses in addition to notarization. Ensure your agent’s signature is included if required by your state.
6. Distribute Copies of the POA
Your Agent must ensure they have the original or a copy of the POA.
7. Store Your POA Safely
Keep your POA documents secure. Use a fireproof safe, or a safe deposit box, or store them at your attorney’s office.
Otherwise, let your family and trusted person know where to find these documents in an emergency.
8. Update Your POA as Needed
Timely update of POA is much needed as circumstances can change.
Draft a new document with changes inform your former agent and relevant parties about the cancellation and provide them with the updated POA.
Example Power of Attorney Document
This Power of Attorney is made on [Date] by [Principal’s Full Name], residing at [Principal’s Address], referred to as the “Principal”.
I hereby appoint [Agent’s Full Name], residing at [Agent’s Address], as my true and lawful Attorney-in-Fact (referred to as the “Agent”) to act in my name, place, and stead in the following manner:
Declaration
I, [Principal’s Full Name], hereby grant [Agent’s Full Name] the authority to act on my behalf following the powers specified in this document.
Conclusion
We can’t predict the future, but creating a power of attorney helps ensure that your affairs will be managed by someone you trust, no matter what happens. This gives you peace of mind knowing that your personal, financial, and medical decisions will be handled according to your wishes.
With the right tools and guidance, you can create your power of attorney quickly and securely, making a proactive step toward protecting your interests.
FAQS
Registration of a POA is not always mandatory, but it is required when the POA involves the transfer of immovable property or other significant legal transactions. Registration provides legal validity and protection.
No, a Power of Attorney automatically becomes invalid upon the death of the principal. The agent loses all authority to act on behalf of the principal after their death.