In Minnesota, ensuring you have the right type of financial power of attorney is crucial for protection during times of incapacity. A Financial Power of Attorney (POA) is a pivotal legal tool that allows one individual to grant another the authority to act on their behalf managing intricate financial affairs. This article emphasizes the importance of creating a POA and helps distinguish between a common law power of attorney and a statutory power of attorney in the state of Minnesota.
What Is a Power of Attorney (POA)?
A power of attorney is a legal document that empowers one person, known as the principal, to appoint another, referred to as the agent or attorney-in-fact, to act in their stead. This “power” can be expansive, granting the agent broad authority over various facets of the principal’s life, or it can be restricted to specific duties. The power of attorney document outlines the specific powers granted to the agent, which can range from managing financial transactions to making medical decisions. It’s essential to understand that the agent must act in the best interest of the principal and within the boundaries set by the POA.
Why Do You Need a Power of Attorney in White Bear Lake, MN?
There’s a myriad of reasons one might require a power of attorney. For instance, if an individual becomes incapacitated and is unable to make decisions autonomously, a POA ensures that their financial, health care, and other essential matters are overseen by a trusted person or entity. A POA can be useful in situations where the principal is unavailable or unable to perform certain tasks, such as being out of the country during a property sale. It provides peace of mind, knowing that there’s a designated person to handle affairs if the need arises.
Key Estate Planning Tools
At Stone Arch Law Office, we help our clients in White Bear Lake, MN, create two key types of POAs as part of their estate planning to protect themselves in case of incapacity:
General Durable Power of Attorney
A General Durable (Financial) Power of Attorney allows you to appoint someone to manage your financial affairs if you’re unable. This includes paying bills, handling bank transactions, and managing investments. Having this in place ensures that your financial matters are continuously managed without any disruption.
Healthcare Power of Attorney
A Healthcare Power of Attorney designates a person to make medical decisions on your behalf. This is crucial if you become unable to communicate your medical wishes due to an illness or accident. With a Healthcare POA, you can rest assured that your healthcare decisions will be made according to your preferences.
Choosing the Right Type of Durable Power of Attorney in Minnesota
Learn about the two types of financial power of attorney in Minnesota in the following video and also the item at the bottom of a Statutory POA that is often missed or misinterpreted.
Common Law Power of Attorney
A common law POA is a flexible legal document that allows you to grant extensive or specific financial powers to your chosen agent. This type of POA can be meticulously tailored to your needs, detailing precise instructions on what your agent can manage, such as handling bank accounts, overseeing investments, or dealing with insurance companies. The benefit of a Common Law POA is its customizability, allowing you to outline your exact wishes. However, Phil Ruce, estate planning director, cautions that the primary drawback is its lack of enforceability. Financial institutions and other entities are not legally required to accept a Common Law POA, which can lead to significant uncertainties, especially during critical times of incapacity.
Statutory Power of Attorney in Minnesota
In contrast, a Statutory Power of Attorney (POA) in Minnesota is a standardized document that financial institutions and other entities are legally obligated to accept, provided it meets the state’s statutory requirements. This type of POA offers less flexibility in drafting compared to a Common Law POA, as it follows a specific format with predefined powers and responsibilities. The major advantage is the certainty it provides. With a Statutory POA, you can be confident that your agent’s authority will be recognized and upheld by banks, insurance companies, and other financial institutions, ensuring that your financial matters are managed smoothly and without unnecessary complications during times of incapacity.
How to Choose the Right Agent for Your POA?
Selecting an agent is a critical decision on which we work closely with our White Bear Lake clients. It’s vital to pick someone reliable, who comprehends your desires and can act in your best interest. Consider their ability to handle complex situations, their understanding of your wishes, and their willingness to act as your agent. It is also feasible to designate more than one agent or specify a successor agent, in case the primary agent is unable to serve. Also, if you are recently divorced, it’s a good time to review your selected agent for your POA.
Key Takeaways
- A Power of Attorney is a legal instrument that permits one to delegate authority to another.
- Various types of POAs exist, and in Minnesota it’s best to create a Statutory POA rather than a Common Law POA.
- A durable power of attorney remains effective even if the principal is incapacitated.
- It’s imperative to select a trustworthy agent and comprehend the powers you’re bestowing.
- Regularly reassess and modify your POA to ensure that it mirrors your current wishes and situations.
For more information and help with creating a Power of Attorney and other estate planning tools in White Bear Lake, MN, book a call with our team at Stone Arch Law Office.
