You might have the wrong type of power of attorney document. The power of attorney document that comes to mind when most people hear those words is the “healthcare power of attorney”. This post will be discussing the financial power of attorney document. This document outlines who has what powers over your financial matters should you become incapacitated and you’re unable to make your own decisions.

Your financial power of attorney document answer the following questions: 

  • Who can pay the bills?

  • Who can talk to the county about your property taxes?

  • Who can talk to the mortgage company?

  • Who can talk to your financial advisor?

  • Who can talk to your property-casualty insurance company?

  • And more financial matters…

There are two types of financial power of attorney documents. 

  1. Common-Law Power of Attorney.

  2. Statutory Power of Attorney

Common-Law Power of Attorney. 

A Common-Law Power of Attorney is a power of attorney document where you write whatever you want or your lawyer writes whatever you want. At the time of incapacity, you hope the bank accepts it.

The bank has no obligation to accept that document. It is an authorization for someone to work on your behalf, but there are no guarantees.

Common-Law documents are particularly good documents if you are doing a commercial transaction, such as buying real estate. You would make your document, submit it to the bank, and if they accept it: great! If they don’t accept it, it’s not a big deal; you and your business partner would simply make some edits and try again.

That’s not a strategy that works for incapacity. If the document isn’t accepted, you are in no state to make a new one – you’re incapacitated.

Statutory Power of Attorney

A Statutory Power of Attorney document is one that followers certain prescribed guidelines in its legislative region to make it an enforceable document. If your lawyer creates the document correctly, and uses the proper forms, it’s a binding legal document that banks cannot refuse. Having the document crafted correctly will give you a level of certainty should you become incapacitated.

This is why it’s so important to make sure you have these things done properly up front. If they are made incorrectly, they might not be useful at a time when you need them most and when you have no ability to correct them. Make sure you have a professional create this document for you.