It can be easy to take a person's health and mental capacity for granted. When a person is feeling healthy and has no history of mental illness, she may not see the need for contingency planning. If she becomes unable to make decisions -- such as those regarding finances -- a power of attorney can be helpful. Depending on how it is drafted, a power of attorney can allow a person to close bank accounts.
Power of Attorney
Power of attorney is a legal document that grants a person (called an agent or an attorney-in-fact) the authority to act on behalf of the principal (the person designating the authority). Powers of attorney are very useful documents, but they must be drafted carefully. Without proper consideration, a power of attorney could bestow more authority than intended, putting the principal at risk for unintended -- and potentially expensive -- problems.
General Power of Attorney
If the principal wants his agent to have the authority to handle every aspect of his affairs, a general power of attorney is used. The language creating a general power of attorney is broad: often, it is similar to "I grant my agent general, full and unlimited power and authority to perform any necessary act I could have done if personally present." According to the 'Lectric Law Library website, the general power of attorney must specifically state certain authority, such as the ability to make gifts. A general power of attorney does, however, grant the agent the ability to close bank accounts, unless the principal specifically withholds that power.
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Limiting the Agent's Authority
Limited or special powers of attorney are narrower in scope. Caution must be taken in drafting special powers of attorney, however. A special power of attorney may only grant the agent the authority to handle finances. Such a grant would still enable the agent to close bank accounts, however. If a principal does not want an agent to have the authority to open or close bank accounts, it should be clearly stated in the power of attorney.
Importance of a Power of Attorney
A power of attorney allows the principal to hand-select a trusted agent to handle her affairs if she becomes unable to do so. Without a power of attorney in place, a person's family may need to petition the court to have a conservator appointed to handle her affairs. This process can be expensive. Furthermore, the principal has no say over who she wants her conservator to be.