Financial powers of attorney protect people from the challenges of sudden incapacitation. When medical emergencies occur, other people may not be able to offer practical support without prior planning.
Financial powers of attorney help ensure that there is a competent adult capable of paying an individual’s bills, managing their investments or overseeing their small business. Powers of attorney typically take effect when an individual becomes incapacitated, possibly due to a motor vehicle collision or a sudden medical event, such as a stroke.
How long do financial powers of attorney remain in effect after an agent or attorney-in-fact starts using their legal authority?
Powers of attorney eventually lose their authority
There are a number of different scenarios in which financial powers of attorney no longer have any legal authority. When the person who drafted the documents recovers and can resume managing their financial affairs, the financial power of attorney that they previously drafted no longer empowers the other party.
Powers of attorney also cease having any authority when the principal dies. At that point, the assets that the agent may have managed become the property of the estate. A personal representative selected by the decedent or appointed by the courts assumes authority over assets in that scenario.
Traditional financial powers of attorney may also lose their authority if the person who drafted the documents becomes permanently incapacitated. Only durable documents retain their authority when a person is unlikely to recover from their condition.
Adding financial powers of attorney to an estate plan can protect people when they are in a vulnerable situation. Expanding an estate plan to include documents that address incapacity, in addition to death, can help protect people from a broad assortment of different situations.