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Important financial details in estate planning

On Behalf of | May 28, 2021 | Powers Of Attorney |

Florida couples usually receive comprehensive advice on the importance of advanced directives such as a living will or durable power of attorney when discussing estate planning. But it is important as well to remember to also consider naming a financial POA when assessing financial assets.

Understanding what a financial POA is will help explain what it does. It is a legal document that authorizes one person, called the agent or attorney-in-fact, to act on behalf of another, called the principal. The agent might be a spouse, relative or friend, or trusted financial or legal professional. Most importantly, the agent should be a trustworthy advocate who is organized and knowledgeable in legal and financial matters.

The kinds of POA’s

A POA is a form of advanced directive, like a living will, that is set up by the principal and usually accompanies the other estate planning documents. The three basic types of POA’s that can function under different situations are:

  • A limited POA, which is restricted in scope and duration for a specific purpose, such as signing a contract by proxy or handling an investment decision on behalf of the principal
  • A general POA, which authorizes the agent broad powers to perform listed actions on the principal’s behalf
  • A durable POA, which does not cease to function in the event of incapacitation. Under Florida law, there are exceptions to this type that require specific wording in order for the POA to survive incapacity.

Setting up a POA

A financial POA will oversee the financial health of the estate, including the estate’s income, assets and liabilities, including business or property transactions. Depending on how it is worded, a financial POA can take effect immediately, or may be triggered by a specific event. One example is if the principal is incapacitated during an emergency medical event, having the spouse as the agent allows him or her to make important financial decisions on behalf of the principal.

In Florida, the principal must not only sign the POA in front of two witnesses, a notary public must also acknowledge the signature. There are also real estate transaction requirements as specified under the Florida Power of Attorney Act.

For Tampa and Clearwater residents, it is wise to consult with experienced legal advocates on all aspects of estate planning, both for future medical concerns and to ensure the overall financial health of the estate.