A durable power of attorney, sometimes called a financial power of attorney, authorizes someone else to make financial decisions on your behalf in the event that you are unable. The person who gives the power is called the principal and the person who power is given to is called the agent (also known as an attorney-in-fact). Under Arizona laws, a power of attorney document must be signed by the principal and a witness before a notary public. A âdurableâ power of attorney means that the document is valid even if the principal is declared mentally incompetent. As principal, you can revoke the power of attorney for any reason and at any time but only in writing on a revocation form.
A durable power of attorney can only grant power to an agent if the principal is deemed incapable. The power only goes into effect in the event of an emergency. This is the most common kind of power of attorney because it allows control over your own accounts. If an emergency does occur, the durable power of attorney ensures that loved ones will not have to struggle to take care of important financial matters or even everyday bills. Naming a durable power of attorney is a proactive form of estate planning so that when the situation improves your family can resume normalcy with as little financial difficulty as possible.
A durable power of attorney can also give immediate power over the principalâs affairs. Granting immediate power can be helpful for those who want a loved one to take care of their affairs in order to forego financial stressors later in life. Granting an immediate power of attorney might also an option for clients who move or travel frequently to safeguard and grow their assets while away in another state or out of the country.
Limited power of attorney versus General Power of Attorney
As the principal, you can grant limited power or a general power of attorney to your agent. If limited, your agent may only conduct specific or limited transactions such as selling a car or a real estate transaction. A general power of attorney is where the principal authorizes the agent much broader authority such as depositing or withdrawing funds in a bank account, selling property, or engaging in any other transactions on behalf of the principal.