A financial power of attorney is a document used to give a person, often referred to as an agent, the right to make financial decisions for another person. Generally, a financial power of attorney gives a person’s agent the power to pay bills and manage investments on his behalf. In many cases, the agent can also collect government-issued benefits, manage retirement accounts, claim inheritance property, and run the drafter’s business. The powers granted using a power of attorney may vary, however, depending on the jurisdiction in which it is created.
Often, a financial power of attorney is created to plan for the maintenance of a person's finances if he is unable to manage them on his own. For example, this legal arrangement may be helpful when a person is ill or incapacitated and unable to manage his finances on his own. Sometimes, however, it may be created for a healthy person who simply wishes to give another party the authority to make financial decisions for him.
In many cases, a financial power of attorney is created to give a person’s spouse or other close relative the power to make financial decisions on his behalf. Sometimes, however, this power is granted to a companion or another person who is not legally related to the individual who creates the financial power of attorney. A person may even give power of attorney to a financial professional. For example, a person may draft a financial power of attorney to give an investment broker the power to make investment decisions without requesting his permission or input.
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Many jurisdictions place restrictions on when a person can sign a power of attorney. In most places, a person has to be mentally competent to sign one. If a judge determines that a person was not mentally competent at the time of the signing, the power of attorney may be considered invalid. A court may also void this document if a judge believes the drafter was coerced into signing it.
Creating a financial power of attorney isn’t usually difficult. A person may obtain a power of attorney form online or from a source that sells legal forms. Completing it usually just involves filling in the blanks on the form and having it notarized to make the arrangement official. If an individual has an attorney, however, he may ask his attorney to create a financial power of attorney for him rather than using a fill-in-the-blanks form.