You may have signed a financial power of attorney (POA), which authorizes one or more persons to act on your behalf if you are unable to do so. In other circumstances, such as when you are still alive, a financial POA is not valid. The POA exclusions mentioned in this article should be discussed with your estate planning attorney.
Financial Power of Attorney
When you sign a financial POA, you are granting legal power to the person you choose to manage your finances. You can name more than one person as your POA, however in some cases, having joint agents isn’t a good idea.
Additional Documentation Required
Suppose you want to authorize your agent to work with the Internal Revenue Service (IRS), the Social Security Administration (SSA), and some financial institutions. In that case, you may have to complete additional documentation.
The Internal Revenue Service: The IRS has its own means for designating an agent. Form 2848 authorizes an agent to represent you in IRS audits and negotiations. Your signature is not required, but your agent must sign the form.
For more information, see IRS Publication 947. The IRS may accept a POA that meets the requirements for being a substitute.
The Social Security Administration: The Social Security Administration does not recognize financial POAs. To designate someone to manage your Social Security benefits, you must appoint a “representative payee.” A potential representative payee must complete form SSA-11 and an in-person application at their local Social Security office.
The Veterans Affairs: VA allows only certain types of representatives, and they must apply for accreditation using different forms. Veterans who are not physically present or who want help with their claim may authorize another person to represent them when pursuing a claim for compensation or special monthly pension benefits. Individual representatives must use VA Form 21-22a. Accredited representatives must use VA Form 21-22.
More information about the VA and POA is available in this document.
Financial Institutions: Banks and other financial institutions sometimes refuse to honor financial POAs. Check with your financial institutions and find out whether they have their own power of attorney forms. If they do, bring the form to your office to be reviewed and executed alongside your financial POA.
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A financial POA is crucial for ensuring that your financial affairs will be handled according to your wishes, but it may not cover all possible needs. Call us today to review your current estate planning documents or put your own personalized plan in place. We can help ensure that you are appropriately protected regardless of the situation.