What is a Financial Power of Attorney
A Financial Power of Attorney is a written document whereby a person (referred to as ‘principal') nominates another person (referred to as ‘agent') to act on their behalf in regards to certain financial matters. A Financial POA can be very specific to cover a certain item or can be very broad to cover a variety of financial items. In Ohio, a Financial Power of Attorney is authorized by O.R.C. 1337.
Types of Financial Powers of Attorney
A Financial Power of Attorney can be made effective upon the signing of the document or it can be made effective at a future date or upon the occurrence of a future event. The latter is referred to as a “Springing” POA.
Does It Have To Be Recorded
Under the State of Ohio, a Financial Power of Attorney that relates to a mortgage or to the sale or purchase of real estate will need to be recorded with the local county recorder[1] If a Financial Power of Attorney has been recorded and the principal desires to terminate or revoke it, then the termination must be filed with the county recorder[2]
Why Should You Have A Financial POA?
The most common reason that a person would have a Financial Power of Attorney is when there is an elderly parent or loved one. As people age, they start to have a variety of medical problems whether these are physical or mental. They may have a hard time managing their financial affairs. The person may forget to pay bills, or pay a bill twice. They may also become the victim of financial theft or fraud.
A Financial Power of Attorney would allow their agent to start paying bills on their behalf. It would also allow them to speak with the principal's bank or mortgage company on their behalf.
This does not mean that the principal has to give up complete control of their finances. They can still write checks on their own behalf and continue to conduct their own financial affairs.
Duties of Agent in the State of Ohio
The agent's duties are set forth in the Uniform Power of Attorney Act[3]. These provisions state the legal and fiduciary duties of the agent when they are acting under the Power of Attorney.
This includes that the agent must act in good faith and in the best interest of the principle. The agent is also prohibited from any conflict of interest or self-dealing. The Agent must also keep records of any receipts or disbursements or transactions made on behalf of the principle.
An agent that violates his duties “… is liable to the principal or the principal's successors in interest for the amount required to restore the value of the principal's property to what it would have been had the violation not occurred…”[4]
A Financial Power of Attorney can be a very useful document and is often an important part of a person's estate plan. Yet care must be given in regards to the creation of the power of attorney as they can be misused.
For more information on Financial Powers of Attorney please contact our office.
[1] O.R.C. 1337.04
[2] O.R.C. 1337.05
[3] O.R.C. 1337.34
[4] O.R.C. 1337.37
