Power of Attorney

What is a Power of Attorney?

A Power of Attorney is a signed written statement in which a person (grantor) gives power and authorizes another person (agent) to act on their behalf.

Power of Attorney Explained

A power of attorney is a legal document that authorizes another person to act on your behalf. It can grant complete authority or be limited to certain acts, certain periods of time, or both.

The power of attorney may be for a definite, specific act or general in nature. The terms of the written power of attorney may specify when it will expire. If not, the power of attorney usually expires when the person granting it dies. Some institutions require that you use the bank’s power of attorney forms. (The bank may refer to this as a Durable Power of Attorney: The principal grants specific rights to the agent.)

There are different types of power of attorney documents. Some financial institutions will have internal POA forms you can fill out and add an agent. The agent you named will only have authority over the accounts with that financial institution.

Different Types of Power of Attorney

You can draft a general power of attorney and name a person authorized to handle your business. A general power of attorney will have the power to handle everything.

In contrast, a special power of attorney only gives an agent specific and limited authority. For instance, an agent in a special power of attorney may only have the authority to handle bank accounts but not real estate transactions.

There are also timeframe aspects related to the power of attorneys. A general POA may cease to be valid once the grantor becomes ill, incapacitated, or dies. A durable POA may allow a person to continue to act as an agent when the grantor is ill or incapacitated.

How to Add a Power of Attorney with a Financial Institution

If you have a POA document, contact your financial institution to have it filed. You will need to have the POA document signed in the presence of a notary or have it notarized. Once a power of attorney document is filed with your financial institution, it’s noted in their systems.

In other instances, a bank or credit union representative may be authorized to help you complete their internal POA form, have it notarized, and filed.

What Happens with a Power of Attorney

Whether you add a POA on your banking accounts or designate a POA over accounts, you’ll want to know the following:

You are giving POA to someone else to handle your accounts.

A power of attorney authorizes your agent to access your bank account or take other actions with your bank. When you give someone authority over your accounts, they have the authority to act as if the accounts were in their name. Be aware of whom you give power of attorney over your accounts.

It may be necessary to file a power of attorney with each financial institution you have accounts with. You can designate a different person to act as a power of attorney for different accounts.

You are given a POA over another person’s accounts.

Being designated in a power of attorney as the person to handle banking issues is a responsibility that should not be taken lightly. A power of attorney gives you the legal right and ability to handle a wide variety of affairs for another person if he is unable or unavailable to handle their affairs himself.