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What is a financial power of attorney?

On Behalf of | Feb 22, 2024 | Powers Of Attorney |

Part of creating a comprehensive estate plan involves making sure that one’s financial affairs are handled if the principal or person who creates the estate plan becomes incapacitated. Setting up a financial power of attorney gives a trusted individual or entity the authority to handle bank transactions, manage investments, pay bills and deal with property matters under such circumstances.

The powers that are granted are based on the principal’s goals and needs. Regardless of what they want handled, the wishes must be conveyed clearly so there’s no question about what should happen.

Scope and customization

The principal determines the extent of power granted to their agent. This can range from broad authority, where the agent can handle almost all financial decisions, to a more limited scope focusing on specific tasks or transactions. For example, a principal might grant an agent the power to only manage their real estate assets or only access certain bank accounts. Terms for when the POA goes into effect can also be spelled out in the document.

Importance of a financial POA

A financial POA provides peace of mind, knowing that financial obligations will be met and investments will continue to be managed according to the principal’s wishes. With a POA in place, there isn’t a need to turn to the court to determine who should make these decisions or how they must be made. Instead, the principal chooses someone they trust to handle these duties.

When selecting an agent for a financial POA in Virginia, a principal needs to choose someone who is reliable and can handle the duties. The person must be trustworthy and able to make decisions based on the best interests of the principal and their assets. Family members, close friends or professional advisors are commonly chosen as agents.

Legal requirements for POAs

The Virginia Uniform Power of Attorney Act provides a statutory form and outlines the specific requirements and powers related to financial POAs, including requiring notarization. It’s advisable to consult with a legal professional when creating a financial POA to ensure it meets all legal requirements and fully captures a principal’s intentions.