Q: What is a financial power of attorney?
A: A financial power of attorney (POA) is a legal document an individual (the “principal”) can use to appoint someone (the “agent”) to act on his or behalf regarding personal, financial and business matters. Typically, a POA is used when an individual can no longer handle his or her own affairs. As the principal, you can name one agent, or two or more co-agents. Each of them can act alone, unless your POA specifically states they must act together, by majority, or in some other way. If you name a single agent, it is wise to name at least one successor agent. Also, you should choose an agent carefully, and grant only those powers that your agent may need to use.
Q: What if I become mentally incapacitated and haven’t signed a POA?
A: In such a case, the probate court may appoint a guardian for you. It is more cost effective and efficient to use a POA to avoid this, although the standard POA document does not have the safeguards that exist under a court-supervised guardianship. Unless you name co-agents in your POA, no one oversees your agent’s conduct if you lose capacity.
Q: How has Ohio’s POA law changed?
A: Ohio’s version of the Uniform Power of Attorney Act (UPOAA) became effective March 22, 2012. It changed the law governing POAs to help prevent financial elder abuse, and to uncover abuse and provide remedies when it does occur. The law now also includes a statutory form with language that lists actions an agent may not take and includes a section called “Important Information for Agent,” describing in plain English the agent’s duties and responsibilities.
Q: If I signed a POA before March 22, 2012, is it still valid?
A: Yes. However, you may want to ask an attorney to review it in light of current law, and consider using the 2012 statutory form.
Q: What powers would I be giving my agent in a POA document?
A: You would decide the scope of your agent’s authority, but principals typically want their agents to handle day-to-day affairs. Ohio’s 2012 statutory form provides a list of the classes of powers a principal is likely to grant an agent, including the power to handle matters related to: real property; tangible personal property; stocks and bonds; commodities and options; banks and other financial institutions; operation of an entity or business; insurance and annuities; estates, trusts and other beneficial interests; claims and litigation; personal and family maintenance; benefits from governmental programs or civil or military service. On the statutory form, you can grant any or all of these powers by writing your initials next to the class(es) of powers.
Q: Are there things my agent cannot do?
A: Yes. Unless the powers are specifically granted, an agent cannot: 1) create a trust for you or make changes to an existing trust; 1) give away your property; 3) create or change rights of survivorship; 4) change your beneficiary designations; or 5) let others act in place of the agent you have named. These are the types of powers that are most likely to be abused. Although you can grant one or more of these powers listed in the section of the statutory form titled “Special Instructions,” the form was not designed for this purpose.
Q: Are there individuals who can challenge an agent’s actions?
A: Yes. Ohio law now recognizes a number of individuals who may file a motion asking the probate court to review the agent’s actions. However, if you, as principal, ask the court to dismiss such a motion, then the court must dismiss it unless the court finds that you are incapacitated.
Q: Can I change my financial power of attorney?
A: Yes. You can always change or revoke (cancel) your POA, but it is best to sign a written revocation of the POA and provide a copy to all banks and other financial institutions where you have accounts. Simply destroying the original document is not enough.
Q: Can my agent act for me if I become incapacitated?
A: Yes. Ohio law now makes all POAs “durable,” meaning that the agent can act even if you, as principal, should become incapacitated, unless your document says otherwise.
Q: When do my agent’s powers end?
A: Your agent’s authority ends when the POA states that it will end, or when you revoke your POA. Many POA documents do not specify when the agent’s authority ends. If your document does not include a specific end date, then your agent’s authority will end only when you revoke the POA or when you die. An agent can never act after knowing the principal has died.
This “Law You Can Use” column was provided by the Ohio State Bar Association. It was prepared by attorney Richard E. Davis of Krugliak, Wilkins, Griffiths & Dougherty Co., L.P.A. in Canton.