Making a Power of Attorney in Georgia can be tricky and can give rise to potential problems. Here are five common mistakes that you can avoid when creating one.
What Is A Power Of Attorney?
Power of Attorney or a POA is an essential legal document that gives authorization to a person (also called an agent or attorney-in-fact), to make financial, legal, or medical decisions on behalf of the principal. This authorization can be without any restriction or limited depending on the executor.
In most Southeastern states like Georgia, the Power of Attorney comes into effect when the principal is unavailable to sign documents or is suffering from a temporary or permanent illness or disability. It ends or is invalidated if the principal terminates the agreement, is not of sound mental health or expires. In cases of couples, the agreement automatically ends if the principal and agent get divorced.
Though this is a useful tool, it is often misunderstood. The agents in Georgia sometimes abuse the Power of Attorney which frequently ends in arguments and termination. Therefore, when appointing an agent or attorney, make sure you fully trust the person to make decisions of your financial and medical affairs.
Types Of Power Of Attorney
Power of Attorney in Georgia gives you the benefit of choosing how much power you want to bestow on your agent. Here are the three types of Power of Attorney that are usually in practice: General POA, Limited POA and Durable POA.
General Power of Attorney gives the agent the ability to make decisions on all aspects. The agent has the same authorization power as the principal and when the POA agreement has been signed, he has to perform or take care of all tasks which include financial and investment decisions of the principal. Note that the POA’s do not allow agents to take the principal’s belongings such as money and property unless stated by the principal.
Also known as special POA, the principal can choose how much control to give to the agent. While creating the POA, all tasks the agent will perform should be outlined clearly and specifically detailed. This also includes giving less power or control over estate, business or financial affairs.
The factors that hold of all POA is that the agreement will be terminated once it reaches the expiration date or the principal is incapacitated. However, the principal can choose to make a POA durable, which says the contract will still be in effect even after he (the principal) is incapacitated or unable to make decisions.
For instance, if the principal has given the agent power to decide on his healthcare affairs, before being incapacitated, if the agreement mentions durability, he can decide the principal’s end-of-life situations. This also works in cases of financial matters. The agent can take the reins even after the expiration date.
Common Mistakes When Creating A POA
1. Giving Too Much Power
Usually, people make the mistake of creating and signing a general POA without understanding the consequences and potential problems that may arise. General POA gives a broad range of power to the agent, and if it is in the wrong hand you could lose all your possessions. For this reason, it’s better to create a limited POA where the agent will only be allowed to perform specified tasks and will be unable to abuse the power given.
But, if you trust your agent, you can create a general POA. Leaving out certain property and giving power to some is another mistake. You may have more investment in stocks or property in future and if these are left out, it’ll all be lost after your death.
2. Choosing Wrongly
When it comes to choosing a POA, you’ll need to select someone you have absolute faith in. We generally think of our spouse or children or a close relative to be the agent. However, before appointing, you need to think carefully about the person capable of handling your finances better. Don’t be misled by emotions. Wrong individuals will only abuse power and may make decisions for their benefit.
3. Making Agent a Joint Owner of Your Bank Account
When you create and sign a POA, you are giving your agent the power to withdraw money from the bank on your behalf. This also includes withdrawing cryptocurrencies such as bitcoins, if you have any. However, some people make the mistake of making them joint owners. Making them a co-owner of your account gives them the right to withdraw and use the money for their personal use. This will create a complicated issue when it comes to distributing your assets after your death.
4. Not Using It
This is the most common mistake people make: not using their POA. As soon as you sign the agreement, you can start sending or emailing copies of the paper to your bank, financial institutions, insurance companies etc. informing them that you have authorized someone to make decisions on your behalf.
5. Not appointing a backup agent
When naming an agent, people often forget to think twice about naming another person to avoid unnecessary complications! If the agent you’ve chosen is unavailable or not willing to do a certain task you can rely on the second person to take over and run your business in Georgia.
Naming and granting someone a Power of Attorney requires a lot of thought. You need to bestow the power on someone you can trust and know that the person will be able to handle all your work efficiently.
Until and unless a general POA is crucial, you can sign a limited one. In addition, it is recommended that you make your agreement durable so that if you become incapacitated, the agent will be able to continue to take charge. This can include financial and medical decisions. Otherwise, all POA will terminate if you are mentally unstable or dead.
Creating a POA ensures that you can bestow all the backlog work to your agent. In the meantime, you can sit back and relax knowing that someone is there to take care of all your possessions, even after you pass away.