Financial Power of Attorney
A Financial Power of Attorney is an important document that should be part of any comprehensive Estate Plan. This document is a tool that gives you the ability to name a trusted individual, called your attorney-in-fact, to access your financial accounts and step into your shoes to manage your assets when you are unavailable or unable to do so.
It is important to note that if you are married, your spouse is not automatically granted authority to act on your behalf. So it is important that if you want your spouse to be able to do so, to name them as your attorney-in-fact.
If you are ever incapacitated, this document can be used and should avoid the need to establish a conservatorship. A conservatorship is a court process where someone is named to step in and manage your finances on your behalf if the court determines that you are no longer able to manage them yourself. By setting up a Financial Power of Attorney, you get to choose who you want to be in charge of your assets.
A Financial Power of Attorney is only valid while you are living. It terminates at your death. It is also possible to create a Financial Power of Attorney for a limited period of time so that it expires on a certain date. For example, a mother could give her son a power of attorney to sign certain documents at a closing on the sale of the mother’s home while she is out of town on vacation.
You can revoke or change your Financial Power of Attorney at any time as long as you are competent. It will also terminate if you previously named your spouse as your attorney-in-fact, and separation, dissolution, or annulment proceedings are started.
In Minnesota, there are two different Financial Powers of Attorney, the Statutory Short Form and the common law power of attorney.
The powers granted under the Statutory Short Form are spelled out in a state statute and include transactions involving real property, tangible personal property, bonds, banking, business operations, insurance, beneficiary designations, gift transactions, fiduciary issues, claims and litigation, family maintenance, and military benefits. You can select that all powers be granted or just select specific power. Additionally, you can designate specific reporting requirements that your attorney-in-fact is required to follow.
The Statutory Short Form Power of Attorney does not give your attorney-in-fact the authority to make health care decisions for you, execute a health care directive on your behalf, make a will for you, enter into or dissolve a marriage, vote, or create a trust for you.
The Statutory Short Form Power of Attorney is widely recognized and accepted by banks and other businesses. The underlying statute imposes penalties on people and organizations who fail to honor them. Third parties can assume that the power of attorney is valid unless they have specific information that it is not.
The common law power is an important tool where a client needs more flexibility in their estate plan. This power of attorney can grant greater flexibility to do gifting, which can be important with larger estates. It also allows the grantor to give different authority to different parties or impose different accounting requirements on each party. The common law power of attorney may even permit you to grant your attorney-in-fact the power to create a trust for you. Since it is not governed by any statute, there are no penalties for failure to accept a valid common law power of attorney.
Please feel free to contact our office at (651) 501-5608 to arrange to have these important documents drafted for you.
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