26Jul
2017

Information on Power of Attorney Forms

Power Of Attorney – Explained by local Cleveland, Akron area Lawyer

While helping clients around the Cleveland, Ohio and Akron, Ohio areas, with offices in Hudson, Ohio and Brecksville, Ohio, we often hear questions about the important topic of power of attorney forms (POAs).  This entry discusses the financial power of attorney, commonly referred to more formally as a “General Durable Power Of Attorney”

Who should have a financial power of attorney?

For anyone who owns assets of any kind – bank accounts, real estate, investment accounts, motor vehicles, personal property such as jewelry, valuable collections, etc. – it is vitally important to have a valid financial power of attorney, to ensure that these assets can be managed effectively if the owner were to become disabled/incapacitated and unable to manage them.  In Ohio, powers of attorney are regulated by O.R.C. §1337.

What is a financial power of attorney?

A financial power of attorney (POA) is a legal document a person (the “principal”) can use to appoint someone (the “agent”) to act on his or her behalf regarding personal, financial and business matters. So, if someone is unable to handle his or her own affairs, the agent named in the POA can manage things until the principal regains their capacity to do so. A principal can name one agent, or two or more co-agents, each of whom can act alone, unless the POA specifically states that they must act together, either by majority or in any other manner. If the principal names a single agent, it is wise to name at least one successor agent.

Is a Power of Attorney Part of Estate Planning?

Yes, all good estate planning lawyers will include a power of attorney as part of your estate planning.  We draft Power of Attorneys for all of our estate planning clients in the Hudson, Westlake, Independence areas and in the greater Cleveland, Akron areas.  For more details on estate planning be sure to check out our estate planning information page.

What if someone becomes incapacitated without a POA?

If a person becomes incapacitated and has not signed a POA, the probate court may appoint a guardian for that person. It is far more efficient and cost effective to use a POA instead.  It is also extremely important to choose an agent carefully, and only grant those powers the agent may need to exercise.

What is Ohio’s law about POAs?

Ohio’s version of the Uniform Power of Attorney Act (UPOAA) governs the use of POAs. A key focus of UPOAA is preventing financial elder abuse.

Most people intend for a POA agent to handle their day-to-day affairs, but not to make changes to their estate plan. Recognizing this, UPOAA prohibits agents from performing certain acts unless the POA specifically authorizes them. Because financial POA documents give significant, far-reaching powers to another person, they should be granted only after careful consideration. When drafting a financial POA document, it is important to consult an attorney.

What does an agent do?

An agent must always act in good faith and in accordance with the principal’s reasonable expectations, to the extent the agent knows them.  Otherwise, the agent must act in the principal’s best interest, and only within the scope of the authority granted in the POA. Also, an agent must act in a way that preserves the principal’s estate plan, if the agent knows about the plan and preserving it is in the principal’s best interest. So, the principal should tell the agent about his or her estate plan, and provide the name of the attorney who prepared it.

What powers does an agent have?

O.R.C. §1337.44 sets forth details about various powers of a POA agent. The principal should specify the desired powers of the agent regarding real property, tangible personal property, stocks and bonds, commodities and options, banks and other financial institutions, operations of the principal’s business, insurance and annuities, trusts, claims and litigation, personal and family maintenance, and government benefits.

Are there things an agent cannot do?

Yes. Ohio law says that, unless the powers are specifically granted in the POA, an agent cannot (1) create a trust for the principal or make changes to an existing trust; (2) give away the principal’s property; (3) create or change rights of survivorship; (4) change beneficiary designations; or (5) let others act in place of the named agent; or (6) waive the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan.
Because these powers can be abused, the principal may consider naming co-agents and require them to act together. The principal should consult with an attorney before granting any of these powers.

Can a financial power of attorney be changed?

Yes. The principal can change or revoke (cancel) his or her financial power of attorney as long as he or she has the mental capacity to do so. It is best to sign a written revocation of the POA and provide a copy to all banks and other financial institutions where the principal has accounts.  If the power of attorney was recorded, or if the agent had authority over real property, then the revocation should be recorded with the county recorder.

Can an agent act after the principal becomes incapacitated?

Yes. Under Ohio law, powers of attorney are durable, meaning that the agent can act even if the principal becomes incapacitated, unless the document states otherwise.

When does an agent’s authority begin?

The agent’s authority begins when the POA says it will begin. If the POA does not state when the powers begin, the agent can begin acting immediately.

“Springing” Power Of Attorney

Some POA documents state that the agent’s authority will “spring” into effect at a future date or upon a particular event. For example, some people want the agent’s authority to begin if and when the principal loses mental capacity. It is best to discuss the use of a “springing” POA with an attorney, as the springing provision may be difficult to demonstrate to banks and financial institutions.

It is often best to allow the POA to take effect immediately, especially since some third parties may not be willing to accept a springing POA.  Of course, it is critical that the agent is completely trustworthy.  The principal may also consider naming co-agents and requiring them to act together, to protect against abuse of the POA.

When do the agent’s powers end?

An agent’s authority ends when the POA states that it will end, when the principal dies, or when the principal revokes the POA.  If the document does not include a specific end date, then the agent’s authority will end only when the POA is revoked or when the principal dies. An agent can never act after knowing the principal has died.

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If you have additional questions about POAs, or are looking for a lawyer to help you prepare a power of attorney for yourself or a loved one, please contact us for more information.