A Power of Attorney (POA) is a document that names another person to make financial decisions for you. In Minnesota, the most common POA is the Statutory Short Form Power of Attorney. This is a form, drafted by the state legislature, that comes with a lot of additional legal protections, including the fact that Minnesota financial institutions are required by law to recognize it. So, that makes it pretty powerful. There are many reasons why you might want a POA. The most common reason is disability planning. If something happens to you, like an accident or something more progressive, like dementia, you need someone to pay your bills for you. A POA allows another person to pay your bills and take care of your assets during a period when you’re not able to do that yourself or when you need some extra help. Another common reason is if you plan to travel abroad for a while and want to have someone local to pay your bills while you’re gone.
If you’ve decided you need a POA, you’re probably wondering how to get one. The best way, in my opinion, is to get a POA as part of an overall estate plan. If you’re thinking about the best person (or people) to make financial decisions for you when you’re incapacitated, then you might as well consider what will happen when you die, or who will make medical decisions for you if you can’t. These questions are all addressed as part of a comprehensive estate plan. I always include POAs with my estate planning packages for no additional charge. And, getting a chance to talk with an attorney about the right way to set up your POA is really important. It may seem straightforward, but there are some nuances and pitfalls to be aware of. For instance, do you want two people to work together? Do you want to require them to co-sign everything, or can they act independently? Can they make gifts to themselves of your assets? Are they required to provide you or someone else with an accounting? It’s good to go over these questions with an experienced attorney.
That said, the Statutory Short Form POA is freely available online. It can be printed, filled in, and then signed in front of a notary, and voila! You have a POA. Now, here are a few things to keep in mind:
Your POA is effective immediately. That means, even though you’re not incapacitated now, the person who holds the POA (your “attorney-in-fact”) can march down to your bank and withdraw all your money if they want to. So, be careful. Only choose someone you trust completely. And, hang on to your original POA. There’s no reason to give it out, instead store it someone safe and let the other person know where they can find it if they need to. Avoid the possibility of loss or damage.
Making a new POA does not revoke the old one. You can have concurrent POAs. So, if you make a POA that names your son as attorney-in-fact, and then later you make a new POA that names your daughter as attorney-in-fact, you now have two attorneys-in-fact. If you want to revoke a POA, you have to sign a separate document called a revocation.
If you bank at a big bank, and I won’t name any names here, but let’s say it rhymes with Bells Largo, go to your bank and ask for their power of attorney form. Big banks have their own unique forms that they require their customers to use, and they often refuse to honor the Statutory Short Form POA even though the law requires them to. It has been a problem for enough clients of mine over the years that I now advice all my clients who bank with large banks to get their proprietary forms and sign them. It will save you a huge headache.
If you have more questions about how to make a power of attorney, please reach out!
