Some clients know how important the Power of Attorney document is. They may have acted as attorney-in-fact for a spouse or an elderly relative. Or they may have experienced first hand the challenges created when someone hasn’t executed a valid Power of Attorney.
The Power of Attorney (aka POA) names an attorney-in-fact to make financial decisions for an individual. As a fiduciary, the attorney-in-fact should be a trusted family member or friend. We have written on the importance of naming trusted fiduciaires here and here, but I recently encountered firsthand the importance of having validly executed POAs.
Two clients (a married couple) were in the process of selling their home when the husband was unexpectedly hospitalized and temporarily incapacitated. The day after he entered the hospital, a willing buyer contacted them. I received an urgent call from the wife, asking about whether she could use her husband’s POA to sign the purchase agreement and the closing documents for him. After a quick review of their file, I was able to call her back with the good news. Yes, the POA that her husband signed did give her the ability to enter into real estate transactions on his behalf. With the current real estate market, you can understand how the POA was extremely valuable to the couple.
This is just one example of how important a Power of Attorney document can be to clients. There are many other reasons to sign a POA naming an attorney-in-fact. As always, be sure to talk with your legal counsel about the circumstances surrounding whether you should sign a Power of Attorney and who to name at your attorney-in-fact.