A financial power of attorney may be a useful estate planning tool. In California, a person called the principal can designate financial decision-making authority to another person, called an agent.
The document gives the agent the power to manage, dispose of and sell the principal’s property and may include other responsibilities.
The power of attorney must be dated and signed by the principal or in the principal’s name by another adult in his or her presence, acknowledged by a notary public or signed by two witnesses. The agent may not act as a witness.
The powers will stay in place for the principal’s lifetime unless the principal states that it will be in place for a shorter period of time. It will remain active, even if the principal cannot make his or her own decisions about managing their property.
The principal can revoke the power of attorney at any time, as long as he or she is competent to do so. He or she can also amend the power of attorney if needed.
When the agent signs the power of attorney, he or she is agreeing to act as a fiduciary for the principal. This means that he or she must act in the best interest of the principal. The agent must avoid conflicts of interest, he or she cannot transfer the principal’s property to him or herself without authorization and must keep his or her property separate from the principal’s property.
However, the agent may be entitled to receive payment for services he or she performs under the power of attorney.
If a person is interested in creating a power of attorney or needs assistance with other estate planning matters, help is available.