A power of attorney is a broad type of legal power that can be granted to an individual who acts on your behalf for a specific purpose. Powers of attorney can be extremely limited, such as a one-time power of attorney arrangement that helps expedite the closing of a property sale. They can also be broad, allowing someone to step in at any time and handle affairs on your behalf.
Weighing all of the options for setting up various types of powers of attorney is a critical part of the estate planning process. You may need someone to act on your behalf in certain situations, especially if you have been medically incapacitated.
By the same token, you will want to be careful and maintain close control over the powers of attorney you have granted to others at any given time. Working with a New Mexico estate planning law firm allows you to understand your current situation and plan ahead for any number of future possibilities according to your own goals.
New Mexico Financial & Family Law can provide you with an experienced estate planning attorney to help you determine the best path forward for drafting new powers of attorney and exercising control over current ones. Call us today at (505) 503-1637 or contact us online to schedule a confidential case review and learn how to prepare for nearly any possible future that lies ahead.
A power of attorney can be granted at any time to anyone, for nearly any reason, provided that it is directed through a document that is signed by the person granting the powers. Furthermore, the person executing the power of attorney must have legal capacity at the time of its creation.
The document should be specific in how it defines the person granted the powers of attorney, naming a specific agent or attorney-in-fact to conduct financial business or make decisions on your behalf. The powers should also be specifically named and outlined, with any limitations or expansions beyond what would be normally expected defined in careful detail.
Because of the need for highly specific legal language, it is extremely advantageous to work with an experienced power of attorney lawyer in New Mexico when creating such a document. Your lawyer can help you review your goals, sort through your various options, and settle on a document that provides exactly the powers you need to grant to someone, while avoiding common risks and pitfalls.
Technically, all a power of attorney document needs is the identity of the person granting powers and the name of the person receiving the powers. The document must be typed, in New Mexico, and signed by the person granting powers of attorney.
Since the validity of the document may be tested by outside parties, it is highly prudent to have the document notarized, meaning its signing is witnessed and affirmed by a registered notary public.
Furthermore, as stated above, the person executing the power of attorney must have legal capacity at the time of its execution. As stated below, a power of attorney may be “durable” meaning the person receiving the powers may continue in that role after the person granting the powers becomes incapacitated. Because certain transactions can potentially be challenged after the fact, it is ideal to have powers of attorney drafted by attorneys, and witnessed by attorneys and their staff, to independently attest to the legal capacity of the person signing in case a dispute arises later.
The state of New Mexico provides statutory powers of attorney forms that can be used for some of the most-common reasons you might need to assign a power of attorney to someone. However, these forms may lack the specificity needed to accomplish your goals while protecting you from any unintended risks. It is often best to work with an experienced attorney when creating power of attorney documents and choosing your agent who will act on your behalf.
Any individual who is a legal adult (18 years old or older) and is of sound mind and mental capacity can serve as an agent. Unlike trusts and other arrangements, the named agent must be an individual, not a corporation or some other legal entity.
Multiple agents can be named, as a matter of fact. The document can specify which agents will act according to specific circumstances, or it can request that all agents must cooperate in order to reach a final decision. When designating multiple agents, though, it is often best to provide one with the ability to override a split decision so that affairs can be conducted with minimal delay.
Technically speaking, any action you could take on your own, you can assign a power of attorney for to someone else to perform that action, instead. Think of it as a legally binding “permission slip,” explicitly authorizing the conduction of specific types of financial transactions or other forms of business.
Most commonly, powers of attorney relate to financial transactions, such as the ability to:
In addition, individuals can grant certain medical powers of attorney. These often include whether to:
Without a power of attorney provided, your family members or other interested parties may have to request guardianship from a court, which can be a lengthy process that has no assured outcome.
There are a number of specifications to consider when granting such powers, many of which are outlined below.
Generally, powers of attorney come into effect the moment the document granting the powers is signed.
If the person granting powers doesn’t want this to be the case, their document can specify circumstances under which the powers of attorney activate. This type of stipulation is called a “springing” power of attorney arrangement since the powers only “spring” into action when the situation arises.
A common example is that many powers of attorney are not activated until the person granting them loses medical or mental capacity, rendering them unable to make their own decisions.
A limited power of attorney will specify a time window when the powers will remain active. That time window can be situational, such as the powers ending after the sale of a specific property. They can also be timed according to the calendar, such as powers that end five years after the date of signing of the document.
Some power of attorney documents don’t name a specific scenario or time window for the powers to be active. In fact, they may be able to be enacted at any time, including after the grantor is incapacitated. These types of powers of attorney are referred to as “durable” since they do not ever expire under the current designated arrangement.
Many individuals feel more comfortable limiting their powers of attorney to specific types of decisions. They may grant the ability to conduct financial transactions on their behalf to a specific broker or licensed attorney, reserving medical decision capacity for their closest loved ones.
Powers of attorney can be revoked by the grantor at any time, provided that they have the capacity to do so.
In addition, courts have the ability to revoke power of attorney on behalf of the grantor in very specific situations, such as if the grantor is clearly being abused or their affairs are being managed contrary to their own interests.
Family members and others with a close interest in the affairs of the grantor have the ability to report suspected abuse and request a revocation of a power of attorney on the grantor’s behalf.
The best prevention for abuse by someone granted powers of attorney is careful selection of that person in the first place.
The Consumer Finance Protection Bureau advises that you protect yourself by “only appointing someone you really trust and make sure they know your wishes and preferences.” They also note that “you can require that your agent regularly report to another person on the financial transactions they make on your behalf.”
A reporting requirement can also contain contingencies that revoke powers or demand an investigation if abuse or breach of fiduciary responsibilities is suspected.
Another sound method of preventing abuse is to ensure that all powers are specifically described, preventing your attorney-in-fact from exercising the ability to do something you’d want to prevent.
Power of attorney documents can be a critical part of your estate plan. Granting your lawyer or other party agent status can help you conduct business on behalf of your estate quickly in the event of your death without the need to request specific powers from the courts.
Further, an advanced directive can help you appoint someone to make medical decisions on your behalf should you become incapacitated.
New Mexico Financial & Family Law can help you create all of the documentation you need and make decisions with your ideal future outcomes in mind. We can also help you regularly audit your existing powers of attorney arrangements, helping you update and revoke documents according to your latest wishes and understanding.
Decisions like granting powers of attorney should not be made lightly, so be sure to speak with our New Mexico attorneys to ensure that you have a strategy in place capable of protecting you and the people you care about most.
Schedule a confidential consultation regarding powers of attorney and other aspects of estate planning today when you call our law firm at 505) 503-1637 or contact us online.
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