What Does It Mean to Establish a Power of Attorney?
Power of Attorney is incredibly helpful, but should only be given to someone you trust. Let's walk through the importance of this role.
If you want to allow someone else to perform certain tasks and make major decisions—such as selling a house, filing taxes, and cashing checks in your name—you will need a power of attorney. These documents, which are sometimes referred to as POAs, give certain powers to trusted individuals known as agents or attorneys-in-fact. In this guide, we’ll define power of attorney and explain the importance of these documents.
The Availability of POAs in Alabama
There are several options for those needing powers of attorney. Most Alabama estate plans include two POA types: financial and medical powers of attorney. Both types are durable, which means they remain in effect even when a person is incapacitated. Most people should have these documents, as they make it easier to prepare for unexpected events.
Medical Powers of Attorney
In the state of Alabama, a medical power of attorney, which is sometimes called a living will or an advance healthcare directive, gives a chosen entity or individual the ability to make health decisions on a person’s behalf when they can no longer do so. With a medical POA, your agent will be able to request or refuse certain medical procedures and treatments on your behalf.
Alabama’s Requirements for Financial Powers of Attorney
Mental Capacity
The state of Alabama requires those making powers of attorney to be able to comprehend their actions and decisions. If you are helping someone else make a POA, ensure that they understand which rights they’re giving up.
Notarization
Although Alabama doesn’t require the notarization of POAs, it’s highly recommended. Under state law, when a person signs a power of attorney in a notary’s presence, the document is assumed to be genuine and is harder to challenge in court. Additionally, most financial institutions require POAs to be notarized.
Making a Financial POA in Alabama
Below, we’ll outline the steps required to create a financial power of attorney in Alabama.
Hire a Lawyer or Fill Out a Form
Alabama offers statutory forms that can be filled out to create POAs. Alternatively, there’s software that guides you through the process step by step. The best way to create POAs, however, is to hire a local estate planning attorney.
No matter which method you use, the process of creating a POA will include choosing the powers the agent will receive. Some people give their agents general authority while others give them power over:
- Real estate holdings
- Stocks
- Bonds
- Financial holdings
- Taxes
- Retirement planning
In Alabama’s fillable POA forms, the state allows users to provide special instructions. Financial powers of attorney are durable, which means they remain in effect after a person’s incapacitation unless that person states otherwise.
Sign the Document in Front of a Notary
As mentioned previously, the state doesn’t require the notarization of powers of attorney. Getting these documents notarized, however, will make them more difficult to contest.
Save the Originals
Once the POA is complete, store original copies in a safe and easily accessible place. If you are in an accident, become ill, or are otherwise incapacitated, your agent will need these documents to do things on your behalf.
Give Your Agent a Copy
Along with saving the original documents, it’s best to give a copy to your attorney-in-fact so they can familiarize themselves with the document’s contents and act when needed.
File the Document With the County Land Records Office
If your agent can conduct real estate transactions, it’s a good idea to file the document with the county’s land records office. This allows office staff to recognize the agent’s authority if they need to mortgage, transfer, or sell real property for you.
Give the Bank a Copy
Many people also give copies of their financial powers of attorney to banks and other financial institutions. This step may make the process easier for an agent if they ever need to enforce the document, as banks are sometimes selective about POA acceptance.
Who Can Be an Attorney-In-Fact?
In the state of Alabama, you can choose almost any mentally competent adult to be an agent. There are a few exceptions; for instance, a resident of an assisted living facility cannot choose an employee as an agent unless they are related to that person. When selecting a POA agent, consider their financial status, location, trustworthiness, and other factors.
The state allows planners to choose co-agents who can act simultaneously, but most people choose just one agent to reduce the risk of conflict. Choosing a successor, or an alternate who can step in if the first person is unavailable, is a wise decision.
When Do Financial Powers of Attorney Take Effect?
In Alabama, a financial POA takes effect as soon as it’s signed, unless the creator says otherwise. It is possible to create conditions that must be met before a POA takes effect—such as officially being declared incapacitated—but these powers of attorney are rarely used.
When Does an Alabama POA End?
A power of attorney, whether it’s medical or financial, ends when the creator passes away. POAs also end if:
- They are revoked. If a person is mentally competent, they can revoke a POA anytime they choose.
- Agents are not available. Planners can reduce this risk by choosing a successor as mentioned above.
- The document is invalidated. It’s quite rare, but Alabama’s courts may invalidate a document if it was signed under duress, or the creator was mentally incompetent at the time of the signing.
Furthermore, Alabama law states that, if a spouse is chosen as an agent, the designation ends when either party files for annulment or divorce. While that person’s authority ends, the POA remains intact. That’s why it’s so important to choose a successor when creating a power of attorney.
Get Legal Advice
While powers of attorney are not complicated documents, it still makes sense to seek legal advice when creating them. By getting a lawyer’s help when making a POA, you’ll ensure its legitimacy and protect yourself from the unexpected. Learn more about Alabama POAs on the firm’s website or call today to schedule a consultation with an attorney.
