Appointing a power of attorney ensures your bills are paid and money owed to you is collected if you're unavailable or incapacitated. Here's what else to know about how having one can help you.
- A power of attorney document grants someone else control over specific aspects of your life.
- Such permissions are recommended in case you become incapacitated.
- There are many other scenarios where they can benefit your family.
- Using a lawyer when filling out the power of attorney document can limit mistakes.
Power of attorney is a legal document that grants another person the authority to act and make decisions on your behalf. The term can also refer to the individual who receives this designation. Generally, the individual granting this power to another will do so because it ensures their assets aren't held up if they're left incapacitated and unable to care for themselves.
Suppose the principal owns multiple properties but can no longer handle the decision-making process because of cognitive decline. They might assign power of attorney to a family member who can do so on their behalf. There are many other circumstances in which assigning power of attorney to another party could be beneficial, including if you'll be out of contact for weeks or months at a time.
Here's a look at four scenarios where assigning power of attorney could make it easier to maintain your real estate holdings.
1) You're heading overseas
A power of attorney is like an additional level of insurance that protects your real estate investments while you cannot do so yourself. Property owners commonly appoint a power of attorney before heading overseas for travel, work, or as a military member. In doing so, you can be confident that your mortgage is paid and rent is collected, even when you can't handle the job yourself.
Doing this work remotely can be challenging, but appointing another individual before you leave ensures you don't miss any important dates or create financial issues for yourself while you're out of the country.
Members of the military have high-risk occupations, making appointing a power of attorney before deployment a good idea. This step ensures your real estate holdings are safe and money goes where it needs to while you're away.
2) You're getting older
Physical and cognitive decline are possibilities as you age. You may eventually reach a stage of being unable to adequately deal with your real estate holdings, so assigning power of attorney makes a lot of sense. There are two power of attorney types to consider – springing and durable – each with a different level of control you'll maintain over your properties.
A springing power of attorney doesn't become effective immediately but kicks in when a specific event occurs, such as your incapacitation or hospitalization due to mental or physical deterioration. It requires careful review because it must address a specific triggering event to avoid potential problems.
A durable power of attorney begins as soon as all parties sign the document. The result is a situation in which you're providing your designee immediate control over your real estate holdings, and lasts for the rest of your life, unless you cancel it. This works well for many older adults because it doesn't require them to predict a triggering event.
3) You have a dangerous job
Those who work in dangerous fields where the chance of injury is significant could benefit from granting power of attorney to a trusted designee. Ending up incapacitated is a concern when working a high-risk job, but having a representative take care of the financial aspects of your properties while you recover makes it less likely you'll default on loans or experience other issues.
A springing power of attorney could be advantageous in this situation because the triggering event would be a workplace injury. Your designee will have to convince your lenders of your incapacitation, though. This could require legal intervention in the form of a letter from a lawyer if the conditions in the original document aren't clear.
It's worth noting that your family could end up in a lengthy and costly legal situation if you're incapacitated without a power of attorney. The court would have to appoint a conservator, and you wouldn't have any control over who is selected for that role. The process can also take time to complete, which could leave your real estate holdings in peril.
4) You want family assistance
It may make sense to appoint a designated power of attorney to make real estate decisions for you even if you aren't incapacitated. If you have a family member with extensive industry experience who you trust with your properties, for example, granting this power can streamline decision-making processes and eliminate red tape. You should be aware that abuse can occur, however. Whomever you designate will fully control your real estate contracts and parts of your finances, so you'll want to be careful.
How to assign power of attorney
Fortunately, a power of attorney is a relatively simple document that doesn't require much information, particularly when dealing with a durable one. All you'll need to appoint a real estate power of attorney is the name and address of the principal and the designee. From there, a lawyer can prepare your documents and coordinate the signing.
PeytonBolin offers power of attorney preparation services in South Florida. Our team ensures these documents are correctly completed so you don't have to worry about real estate deals falling through or running into challenges in the future because of problematic documentation.
Contact PeytonBolin today to learn more.