Power of Attorney, it’s written, but is that enough?

Most people recognize that a Financial Power of Attorney (PoA) is a critical part of a complete estate plan. While a Last Will and Testament describes the distribution of your estate after you have passed away, the financial Power of Attorney allows you to give somebody to power to handle your business affairs if you are incapacitated or otherwise unable to take care of your finances yourself. This article discusses the implications of creating a Financial PoA. Keep in mind that we are not dealing with a healthcare PoA in this article which is an entirely different document.

Power of Attorney

Background to the Financial Power of Attorney

A financial PoA allows you (the grantor, principal or donor) to grant power to another person (the attorney-in-fact or agent) to handle specific or general financial tasks under defined circumstances. This gives rise to the different types of financial PoA; they can be “special” or “limited” if they grant specific powers to the agent, or you can create a “general Power of Attorney” if the powers are not to be restricted.

There are three types of general PoA that differ in how they come into effect;

Immediate Power of Attorney:

In order to create a legal PoA the grantor must have the mental capacity to know that they are creating the document, and understand the implications of doing this. As the name implies, an immediate PoA grants the powers to the agent as soon as the document is signed. It is therefore usually created when there are geographical limitations, for example, you need help to handle important financial transactions while you travel the World for a few months.

Durable Power of Attorney:

Unless stated otherwise a financial Power of Attorney is voided if the grantor loses mental capacity. A durable, or enduring PoA continues to be in effect even if the grantor becomes incapacitated. The definition of incapacitated is usually described in the document, but it would likely include physical injury or mental illness.

Springing Power of Attorney:

This is perhaps the most widely used PoA. When you are told to complete your estate planning documents, it is usually a Springing Power of Attorney that is recommended. This document has no effect all the time you are capable of handling your own finances or business affairs, but the moment you lose capacity (usually determined by two physicians), the Power of Attorney comes into effect.

Why a Power of Attorney is important

We are often asked whether everybody needs a Power of Attorney, and the answer is very different to a Will. The vast majority of financial PoA’s that are created will likely never be used as they are set up to only come into effect under specific circumstances. However, if you are ever in that situation, and lose capacity, then it is vital to have your Power of Attorney in place. Imagine for a moment that you temporarily or permanently lose the ability to handle your own financial affairs. You will still have bills to pay, insurance claims, benefit applications, you may have investments to be managed, or business interests to be handled.

If you own a house or car jointly, then the joint owner can often be restricted on what they can or cannot do with these assets. There have been situations where it makes sense for the spouse of an incapacitated partner to sell or refinance their home, but this would not be possible without a financial Power of Attorney in place.

Is a Power of Attorney enough

Now imagine a situation where you have done the responsible thing and created your Financial Power of Attorney, then you have been hit by the proverbial bus. You may have named your parents as your agents, so what would the next step be?

There may be medical bills to pay, so the doctors will ask if anybody has been granted powers through a PoA. Hopefully you made it clear when you set up the document that you were granting these powers to your parents and they were made fully aware of their responsibility. They were also told where the document is stored so that they have easy access to it. With luck, you gave them the document in a sealed envelope after you signed it for their safekeeping.

Now they have the document they will have the power to take care of all of your financial and business affairs, but how are they going to know which bills need paying and which accounts you have? Maybe you want your stock trading accounts to be suspended, but how do they even know that this accounts exists? Handing the document to your parents is just the first step to solving the problem and is ineffective unless it comes with some detailed instructions.

Introducing LifeLocker

At USLegalWills.com we have put together a suite of services that increase the effectiveness of a Financial Power of Attorney.


We offer a unique, proprietary keyholder™ mechanism that allows you to name trusted individuals to access your important documents at the appropriate time. The keyholders are given a unique access ID which determines which documents are available to them. The documents are locked until a specified time period passes at which time they are released to the keyholder™. This allows vital services like the  MyMessages services that sends out messages after you have died and the Executor tool – MyLifeLocker to be placed in the hands of the right people at the right time.


You can write messages to key recipients that are delivered when unlocked by your keyholders. These messages can include instructions for accessing accounts, information describing the location of key assets or documents, or any other personal messages that help your agents. The messages are released after a time period specified by you and delivered by email once unlocked.

My Life Locker™

For a more comprehensive inventory of contact names, financial accounts, assets and online login credentials we partnered with My Life Locker, the ultimate organizational system. If something did happen to you, this tool is invaluable to your agent. You are able to describe literally everything that somebody would need to take over your financial affairs ranging from house utility bills, to insurance policies, and even online accounts.

The serious consequences for online accounts

Why would you need to grant access to your online accounts if you were incapacitated? imagine for a moment that you own a domain name with an email address and were taken seriously ill for 3 months, how disruptive to your life would it be to lose that domain name? Bearing in mind that the new owner could quite easily set up the domain to receive your ongoing emails from your bank, notifications on account renewals, or even personal emails.

It is clearly very important that you have a financial Power of Attorney in place, but once you have taken care of this, it is vital that you provide your agent, or attorney-in-fact with the tools that they will need to take care of your financial affairs. This means letting them know where your accounts are held, and which actions may need to be taken.

Do not neglect the instructions that need to come with the powers.

Tim Hewson