A power of attorney is one of the most important documents in any estate plan, and one of the most commonly overlooked until it is too late to execute one. It designates a trusted person, called an agent or attorney-in-fact, to manage your financial affairs on your behalf if you become unable to do so yourself. Without a durable power of attorney in place, your family may need to pursue a conservatorship through the courts to obtain legal authority to manage your finances during a period of incapacity, a process that is significantly more expensive, more time-consuming, and more stressful than executing the document while you still have capacity. At Tollison & Webb P.A., we draft powers of attorney for individuals and families throughout North Mississippi as part of a complete estate plan and as standalone documents when clients need them.

Types of Powers of Attorney

Durable Power of Attorney

A durable power of attorney remains in effect if the principal becomes incapacitated, which is the primary reason most people execute one. The word durable refers to this feature. Without the durable designation, a standard power of attorney terminates automatically upon the principal’s incapacity, which defeats its purpose as an incapacity planning tool. We draft durable powers of attorney for all estate planning clients who need financial management authority designated for a potential period of incapacity.

Springing Power of Attorney

A springing power of attorney takes effect only upon the occurrence of a specified event, typically the incapacity of the principal as certified by one or more physicians. It does not grant the agent any authority until that triggering event occurs. Some clients prefer this structure because it limits the agent’s authority until it is actually needed. The tradeoff is that proving incapacity can sometimes delay the agent’s ability to act in an urgent situation. We advise clients on the tradeoffs between an immediately effective durable power of attorney and a springing power of attorney based on their specific circumstances and relationship with their chosen agent.

Limited Power of Attorney

A limited power of attorney grants authority for a specific transaction or purpose and expires once that purpose is fulfilled or a specified date passes. Common examples include authorizing someone to sign documents at a real estate closing on your behalf or to manage specific financial transactions while you are traveling or otherwise unavailable. Limited powers of attorney are distinct from the broad financial management authority of a durable power of attorney used in estate planning.

What a Power of Attorney Covers

A durable power of attorney for financial matters can grant broad or limited authority depending on how it is drafted. Broad authority may include managing bank accounts and investments, paying bills and taxes, buying and selling real estate, managing business interests, making gifts, and handling other financial transactions. More limited powers of attorney can restrict the agent to specific categories of transactions. We draft powers of attorney that grant the scope of authority appropriate to our client’s situation and the level of trust they have in their chosen agent.

Choosing Your Agent

The person you name as your agent under a power of attorney has significant authority over your financial life if the document is ever used. Choose someone who is trustworthy, organized, and capable of managing financial matters responsibly. It is also important to name an alternate agent in case your first choice is unavailable or unwilling to serve when needed. We advise clients on what the agent role entails and the qualities to look for when making this selection.

Power of Attorney vs. Conservatorship

A power of attorney is a private document executed voluntarily by a person with capacity. A conservatorship is a court-ordered arrangement imposed when a person has already lost capacity and can no longer execute a power of attorney. If you become incapacitated without a durable power of attorney in place, your family has no private mechanism to manage your finances. They must petition the court for a conservatorship, which requires legal proceedings, court supervision, ongoing reporting obligations, and significantly more expense than a power of attorney would have cost to prepare in advance. Executing a durable power of attorney while you have capacity is one of the simplest ways to protect your family from that burden.

Frequently Asked Questions

When does a power of attorney take effect?

An immediately effective durable power of attorney grants the agent authority as soon as it is signed, though a responsible agent will only exercise that authority when needed. A springing power of attorney takes effect only upon the occurrence of the triggering event specified in the document, typically certified incapacity. We advise clients on which approach is appropriate based on their circumstances and their relationship with their chosen agent.

Can I revoke a power of attorney?

Yes, at any time while you have capacity. Revocation should be done in writing and the agent and any third parties who have relied on the power of attorney should be notified. If you have used the power of attorney with financial institutions or other parties, providing them with written notice of revocation is important to ensure they stop honoring the agent’s authority. We advise clients on the proper steps for revoking a power of attorney when circumstances change.

Does a power of attorney give my agent authority after I die?

No. A power of attorney terminates automatically at the principal’s death. After death, the executor named in the will has authority to manage and distribute the estate through the probate process. A power of attorney and a will work together but serve entirely different purposes and cover different periods of time.

Can my agent use a power of attorney to make gifts or change my estate plan?

It depends on how the power of attorney is drafted. Gift-giving authority and the ability to create or amend trusts or change beneficiary designations must be explicitly granted in the document. We are careful about these provisions because broad gifting authority in particular can be misused. We advise clients on whether to include these powers based on the specific circumstances and the level of trust they have in their agent.

What if my agent misuses the power of attorney?

An agent under a power of attorney has a fiduciary duty to act in the principal’s best interests and only for the principal’s benefit. Misuse of a power of attorney, including self-dealing, unauthorized gifts, or using the principal’s assets for the agent’s own benefit, is a breach of fiduciary duty and can give rise to both civil liability and criminal charges. If you believe an agent is misusing a power of attorney, contact an attorney promptly. We advise families in these situations and help them take the appropriate steps to protect the principal’s assets.

Contact an Estate Planning Attorney in North Mississippi

If you need a power of attorney drafted or have questions about an existing one, contact Tollison & Webb P.A. to schedule a consultation. We help individuals and families throughout North Mississippi put the right documents in place.

Call (662) 234-7070 or contact us online.