Special Power of Attorney
A special power of attorney is required when you need a person to handle specific tasks on your behalf. This could be due to you being out of town, hospitalized, or to let others handle transactions related to personal finance, real estate, or health care.
Countless reasons exist for executing special power of attorney documents. Powers can be granted to collect debts, manage real estate investments, sell or buy real estate, manage a business, open or close bank accounts, manage investment portfolios, access safety deposit boxes, sell automobiles, or act as your agent with government entities such as the IRS.
Financial institutions, government entities, and heath care providers are not allowed to provide records or access to other people's accounts without legal authorization. Nor, are people allowed to engage in transactions on behalf of another without a notarized power of attorney form.
It's always best to hire a lawyer to draft special power of attorney forms. Although there are do it yourself forms that let you fill in the blanks, these documents might not provide appropriate legalese or specific information required to make forms legal.
The type of power of attorney required depends on the kind of transaction involved. Each POA is comprised of a 'Principal' and 'Attorney-in-Fact', along with a third party. The Principal grants permission to the attorney-in-fact to engage in some sort of transaction with a third party.
A real estate power of attorney can be used for nearly anything related to buying, selling, transferring, maintaining, construction or renovation. Investors often establish POA for realtors or brokers to manage real estate investments. Another use is when investors hire a property management group to collect rent and oversee the care of rental homes.
Real estate POA is also used when contractors build new homes and homeowners let them buy construction materials. This document can be used to authorize an agent to transfer property using 1031 exchanges, as well as buy or sell realty.
If you own a business and want to allow a person to engage in specific business transaction you will need to execute a power of attorney. Transactions could range from buying, selling, or exchanging business assets; purchasing real estate; buying or selling business notes; or entering into joint ventures with business partners.
A special power of attorney can be utilized to grant powers to the attorney-in-fact to manage investments. Common powers include: opening, closing, or changing investment accounts; make deposits to and withdrawals from accounts; manage mutual funds, IRAs, Keogh's, and whole life insurance accounts; or interact with stock brokers or investment firms on your behalf.
If you're having problems with the IRS and hire someone to represent you, you will need to execute a special power of attorney. Powers can be designated to file a tax return, obtain 4506 tax form, negotiate to reduce delinquent taxes or establish a payment plan, act as your agent for tax audits, or respond to IRS notices.
Lastly, a special or limited power of attorney can be used with estate planning strategies to authorize a person to engage in specific estate settlement procedures. It's best to talk to a probate attorney to determine which kinds of POA forms are necessary.
Probate estates are supervised by a personal representative who is charged with several duties. Probate laws vary by state. Some allow personal representatives to engage in duties according to the last will and testament, while others require a Will and power of attorney forms.
Other types of power of attorney forms include: healthcare proxies, medical and general. Each has specific uses and some are referred to by different names according to the state where they are executed.
We invite you to learn about the different ways to use POA forms, as well as acquire additional information about special power of attorney in our estate planning and personal finance article library.