Our Northeast Ohio Estate Planning Lawyer Discusses the Steps Involved in Setting up a Financial Power of Attorney
A financial power of attorney (POA) is a written document whereby a person (referred to as "principal") nominates another person (referred to as "agent") to act on their behalf regarding certain financial matters. A financial POA can be very specific to cover a certain item or can be very broad to cover a variety of financial items. In Ohio, a financial power of attorney is authorized by O.R.C. 1337. Our Northeast Ohio estate planning lawyer can set up a financial power of attorney as part of the estate planning process.
Types of Financial Powers of Attorney
A financial power of attorney can be made effective either:
- Upon the signing of the document
- At a future date or upon the occurrence of a future event
If the POA is made effective at a future date or upon the occurrence of a future event, this is referred to as a “Springing” POA.
Does the POA Have to Be Recorded?
Under the State of Ohio, a financial power of attorney that relates to a mortgage or the sale or purchase of real estate will need to be recorded with the local county recorder. If a financial power of attorney has been recorded and the principal desires to terminate or revoke it, then the termination must be filed with the county recorder.
Reasons for a Financial POA
The most common reason that a person would have a financial power of attorney is when there is an elderly parent or loved one. As people age, they start to have a variety of medical problems, whether these are physical or mental. They may have a hard time managing their financial affairs. The person may forget to pay bills or pay a bill twice. They may also become the victim of financial theft or fraud.
A financial power of attorney would allow their agent to start paying bills on their behalf. It would also allow them to speak with the principal's bank or mortgage company on their behalf.
This does not mean the principal must give up complete control of their finances. They can still write their checks and conduct their financial affairs.
Duties of Agent in the State of Ohio
The agent's duties are outlined in the Uniform Power of Attorney Act. These provisions state the agent's legal and fiduciary duties when acting under the Power of Attorney.
This includes that the agent must act in good faith and in the best interest of the principal. The agent is also prohibited from any conflict of interest or self-dealing. The Agent must also keep records of any receipts, disbursements, or transactions made on behalf of the principal.
An agent that violates his duties “is liable to the principal or the principal's successors in interest for the amount required to restore the value of the principal's property to what it would have been had the violation not occurred."
A financial power of attorney can be a very useful document and is often essential to a person's estate plan. Yet care must be given regarding creating the power of attorney as they can be misused. If you have questions about power of attorney or need clarification, please get in touch with our estate planning attorney at McNamee and Company for more information.