What is a 'Power Of Attorney'
A power of attorney is a legal document giving one person (called an "agent" or "attorney-in-fact") the power to act for another person (the principal). The agent can have broad legal authority or limited authority to make legal decisions about the principal's property and finance. The power of attorney is frequently used in the event of a principal's illness or disability, or when the principal can't be present to sign necessary legal documents for financial transactions.
Power of Attorney for Property and Finance gives the person whom you designate (your "Agent" or "attorney-in-fact") broad powers to handle your property, tangible or intangible.
Among the issues discussed in general in the durable power of attorney are:
- real property and personal property transactions,
- stock and bond transactions,
- commodity and options transactions,
- business operating transactions,
- banking and other financial institution transactions,
- insurance and annuity transactions,
- estate and trusts,
- claims and litigation,
- personal and family maintenance,
- division of social security and other governmental benefits,
- retirement plan transactions, and
- tax matters and gifts.
Why do I need an Iowa or Illinois financial power of attorney?
If you become ill or injured and you can't take care of your own finances, someone else must step in to help. With a financial power of attorney, you name a trusted person to pay bills, make bank deposits, watch over investments, collect insurance or government benefits, and handle other money matters on your behalf. Without this important document, your loved ones will have to go to court to get authority over your financial affairs.
Who makes financial decisions for me under an Iowa or Illinois financial power of attorney?
In Iowa and Illinois, the person you name to make decisions for you is called your attorney-in-fact. Any competent adult can serve as your attorney-in-fact; the person most definitely doesn't have to be a lawyer. Honesty, common sense, and dependability should be the most important factors in your decision. It's also wise to choose someone who lives nearby—this will make it easier to take care of practical tasks.
When does my financial power of attorney take effect?
You can draft your financial power of attorney so that it takes effect as soon as you sign it or it can "spring" in to effect at a future date or event (ie if you become incapacitated). You should specify that you want it to be "durable." If you don't, it will automatically end if you become incapacitated.
If you don't want to make an immediately effective document, you can state that your power of attorney will not go into effect unless a doctor certifies that you have become incapacitated. This is called a "springing" durable power of attorney.
When does my financial power of attorney end?
A durable power of attorney automatically ends at your death. It also ends if:
- You revoke it. As long as you are mentally competent, you can revoke your document at any time.
- You get a divorce. In Iowa, your durable power of attorney is not automatically terminated if your spouse is your attorney-in-fact and you get a divorce. As a practical matter, it is always wise to make a new power of attorney as soon as you file for divorce.
- A court invalidates your document. It's rare, but a court may declare your document invalid if it concludes that you were not mentally competent when you signed it, or that you were the victim of fraud or undue influence.
- No attorney-in-fact is available. To avoid this problem you can name an alternate attorney-in-fact in your document.