tennessee durable power of attorney for finances
What is a Tennessee Power of Attorney and How is it Used?
If you have read up on our services, you may already have a general idea of what a Power of Attorney (POA) is. You also probably know that you can have a medical POA or financial POA, or a POA that provides much more specific authority to your agent. These are known as “limited” Powers of Attorney.
In general, a medical power of attorney grants an agent the authority to make medical decisions on behalf of the principal, and a financial Power of Attorney grants the agent the authority to make financial decisions, access bank accounts, sign contracts, buy and sell real estate, trade stock, etc. on behalf of the principal.
In addition, a Power of Attorney in Tennessee can either be durable or non-durable. If a Power of Attorney is durable, it remains in effect even if you become incapacitated. On the other hand, the authority granted by a non-durable Power of Attorney ends if the principal becomes incapacitated.
Typically, every estate plan will include a durable power of attorney for medical care and for finances, because it is essential for a good estate plan to consider the possibility that you could become incapacitated prior to death.
What is an Attorney-In-Fact?
When you create a Power of Attorney, you elect someone to act on your behalf. These individuals are commonly known as “Agents,” however the legal term is “Attorney-in-Fact.”
Thus, if you name your spouse as the person who will make decisions for you in your POA, they are your “Attorney-in-Fact.” That said, the term “Agent” is becoming more popular, as it is a less archaic term.
Your Attorney-in-Fact will have only the authority to act that you grant. Thus, the more specific your POA, the more control you have over your decision-maker.
What Are the Legal Requirements of a Financial POA in Tennessee?
In Tennessee, a financial power of attorney (POA) is a legal document and must meet certain requirements in order to be valid. The most important requirement is that you must have the mental capacity to create the POA, which if challenged, will be a determination made by the Court.
In addition, your POA must be in writing and it must either be signed in the presence of a notary or witnessed by two disinterested parties. (A witness cannot be an agent).
The easier option is the notary; however, if you are creating the POA as part of an estate planning package, you can have the witnesses required for your Will sign the POA as well. If possible, witness signatures should be obtained, as they act as additional assurance to the Court that you were of sound mind when you signed the document.
There is no need to file the Power of Attorney in order for it to be valid; however, your agent will need to provide copies to financial institutions in order to act on your behalf.
When Does My Durable Financial POA Take Effect?
Unless you specify otherwise, a Power of Attorney will be effective as soon as it is executed. However, you can provide a specific date or situation that causes the Power of Attorney to “spring” at a later time. Usually, these “springing” Powers of Attorney become effective when a physician declares you to be incapacitated. Even so, it may not be advisable in your situation to create a “springing” POA.
When Does My Durable Financial POA Terminate?
Your POA will end under the following circumstances:
You die;
Agents named in the POA are no longer available or refuse to serve;
You revoke the POA; or
A Court finds the POA to be invalid.
Otherwise, you can specify in the document itself a condition or time that the POA will automatically terminate.
Can I Make a Durable Financial POA myself?
Absolutely! There are no laws or rules that prevent you from drafting your own POA or using a power of attorney form from a free or paid website. One of the larger platforms that offers a drafting service is Quicken/Nolo’s WillMaker, and there are various websites that offer forms for download. As with any one-size-fits-all solution, these self-service options should be approached with caution since they offer limited advice and customization options. Additionally, a licensed estate planning attorney should include these documents in your estate plan, or offer them “a la carte” for close to the same amount as you’d pay for software.
What Do I Do With My POA Once It's Finished?
As mentioned above, there is no rule that requires you to file a Power of Attorney with the State or County once it has been properly executed. Even so, here are some things you should do when you have the Power of Attorney completed:
Make copies of the POA and store the original in a safe place;
Provide a copy to each Agent you named in your POA;
Provide a copy to each of your financial institutions, brokerages, mortgage holders, etc. to keep on file; and
Consider filing a copy with the County Register of Deeds if you gave your Agent the authority to complete real estate transactions on your behalf.
In addition, you’ll want to have a frank discussion with your Agent(s) in order to make sure that they understand the responsibilities they will have under the POA, as well as to ensure that they are willing to act as your Agent. Because you cannot force someone to act as your agent, it is good to talk with them before you even start your estate planning process.
Need Help Preparing a Financial Power of Attorney?
If you need help preparing a financial power of attorney, you should contact an attorney. A power of attorney is a legal document that gives someone else the authority to act on your behalf, and every estate plan should include a power of attorney so that your affairs can be managed if you become incapacitated. Knoxville, TN has many attorneys who can help you prepare a financial power of attorney.
