What is a Power of Attorney and why is it important?

A Power of Attorney (POA) allows you to appoint someone you trust to act on your behalf in certain situations and can include managing your financial affairs. But what exactly is a POA and why is it important?

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A Power of Attorney (POA) is a legal document that gives another person the authority to act on your behalf in certain situations.

This can include making decisions about your finances, property, health care, or other matters. A POA can be used in a variety of situations, such as if you become incapacitated, are unable to handle your affairs due to illness or travel, or simply want someone else to handle your affairs while you are away.

While the requirements vary from state to state, there are two categories of POA's:

  1. General Power of Attorney: a general POA remains in effect only while you have mental capacity. It allows an attorney to make decisions about your financial matters.
  2. Enduring Power of Attorney: An enduring POA remains in effect even if you become mentally incapacitated. It allows an attorney to make decisions about your financial and/or health matters.

A POA can be set-up in such a way that it only comes into effect if a specific event occurs (for example, if you become incapacitated). You can also place limits on the attorney’s powers (for example, the appointment can be limited to certain tasks, such as selling your property). 

Why is a power of attorney important?

Having a POA in place is an important part of planning for the future. It can provide peace of mind and protect your interests if you become incapacitated.

Appointing an attorney: 

  1. Protects your interests: If you become incapacitated and have an enduring POA in place, your attorney has the authority to make decisions on your behalf to protect your interests.
  2. Avoids guardianship: If you do not have a POA in place, a court may appoint an administrator or guardian to make decisions for you. This can be a long and expensive process. 
  3. Allows for a smooth transition of affairs: If you are unable to handle your affairs due to illness or travel, a POA allows someone else to handle your affairs without interruption. For example, if you were to go on an overseas trip and you’re unable to call your bank, your attorney (if authorised on your bank account), may be able to assist by talking to your bank for you.
  4. Gives peace of mind: Knowing that someone you trust has the authority to handle your affairs can give you peace of mind.

How to choose a person for power of attorney

When choosing someone as your attorney, it's important to choose someone you trust. This person should be dependable, responsible, and have your best interests at heart. You might consider choosing someone who lives close by or is easily accessible in case they need to act on your behalf. You may choose to appoint multiple attorneys, and you can decide whether those attorneys make decisions jointly, or whether they can make decisions on their own. Your attorney must also meet certain legal requirements, such as being over 18 years of age. 

Appointing your attorney

There are strict requirements for appointing an attorney, which vary from state to state. You will need to complete the correct form, and in certain cases, you may need to register your POA (for example, if you wish for your attorney to act on your behalf in property transactions). If you have questions about POAs or need help setting one up, you should consider consulting a lawyer for guidance. 

If you have appointed an attorney and would like to add them onto your accounts with Heritage Bank, there are some certain requirements that need to be met. You’ll need to complete our Power of Attorney Addition of Party form, and your POA will need to provide us identification. Contact us 24/7 on 13 14 22 or visit your local branch for more information.

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