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Power of Attorney (POA) for Incapacitation
You need to authorize a person to take financial and other decisions and implement them on your behalf when you are unable to make such decisions due to crippling illnesses.
Nexgen can provide you with appropriate advice and draft a Power of Attorney to suit your requirements.
If you become incapacitated either Physically Incapacitated or Mentally Incapacitated i.e. you are in ‘Çoma’, Paralytic or you are suffering from Dementia etc. In such a situation Who will be able to access your Bank Accounts, your Mutual Fund Investments, if you have rented out a property who will be able to take the rent issue the rent receipt. As your signature is required to access the family savings? What if assets need to be sold to pay for your medical care…but because you cannot sign the relevant documents, the family cannot raise the funds.
Your family could be left facing serious financial hardship due to their inability to access your assets while you are still alive.
So, it is important to plan for the possibility that at some point in the future, you may not be able to make decisions about your financial assets, housing, property, etc.
By making prior arrangements, you can decide who would act as substitute decision-maker on your behalf.
As a responsible individual you might have planned how your property will be divided amongst your loved ones following your death through a ‘Will’ . However, all of these plans can seem like a waste of time and effort if the individual, through an accident or illness, finds themselves in a position where they cannot manage their own affair while they are still alive. The individual’s inability to manage his or her own assets, in particular, could result in a substantial depletion of the value of these assets. This could, in turn, render meaningless the individual’s plans for the distribution of his or her assets on death.
Creating a ‘Financial Power of Attorney’ is an excellent way to avoid such a situation and makes it possible for you to appoint someone who will be able to access your wealth and take financial decisions on your behalf.
A “Power of Attorney” (POA) is a legal instrument whereby one person gives another person the authority to be his/her representative and to make binding legal and financial decisions on his/her behalf. Technically, it is defined extensively as “an authority whereby one is set in the stead or place of another to act for him.”
What is the Concept of POA?
The concept of – Power of Attorney – (POA) has gained importance due to the need of being – present – for business purpose or otherwise, without being physically there.
It is legally is defined as the – authority whereby one is set in place of another to act for him.
The person granting the document is referred to as the principal individual and the person attaining it is called the ‘agent.’
We need to know three things regarding this formality – the purpose of creating the document, the powers that the agent holds and the method in which the document would finally be brought to its logical conclusion. In India, excluding Jammu & Kashmir, issues related to the Power Of Attorney are governed by ‘The Powers Of Attorney Act, 1882.’
Who Can Grant Power of Attorney?
A power of attorney can be executed by any person who is competent to enter into a contract. However, the married women can execute powers of attorney even if they are minors. A company while executing power of attorney must make conformity with the ‘Articles of Association’ and its common seal. A person must be competent to give power to the appointed person so that it will not affect the legality of the instrument/deed of power of attorney.
So, anyone who is a major with the appropriate mental capacity can grant the power of attorney to another. The person granting the power of attorney is the "principal" or "grantor," and the person who attains the responsibility is known as the "agent" or "attorney-in-fact."
What are the types of Power of Attorney?
Power of Attorney could be of various types – General and Special and Durable.
General Power of Attorney: The ‘General’ authorizes the agent to act on behalf of the particular person in all matters, or in all matters of a particular nature or generally in respect of general business.
This kind of POA is known as General Power of Attorney. Whatever the person can do himself, he is authorizing another person to do on his behalf.
Special Power of Attorney: A ‘Special’ format, on the other hand, authorizes the agent to represent the principal party only in the context of some particular specified activity and no sale, exchange, gift or mortgage of a property is to be carried out. This is a restrictive POA and titled as ‘Special Power of Attorney.’
Durable Power of Attorney:A Power of Attorney which specifically says otherwise, agent’s power ends if principal become mentally incapacitated. However, a power of attorney may say that it is to remain in effect in the event of future incapacity of the principal. A power of attorney that says this is called a durable power of attorney.
For incapacitation we should use a Special Durable Power of Attorney.
What powers can be granted by Power of Attorney?
- To execute all bonds, contracts, deeds, notes, mortgages, drafts, money orders, checks, etc.
- To file, sign all insurance forms, tax returns, and any other documents.
- To manage, settle, adjust and compromise all the matters of real estate or property.
- To collect rents, lease, bargain, grant, borrow and mortgage, or sell.
- To sell any and all bonds, securities or shares of stocks.
- To enter and perform any agreements, contracts, writing.
- To make, sign, execute, deliver and acknowledge any agreement or contract.
- To sue on behalf of the executor of the Power of Attorney.
What is the Duration of Power of Attorney?
A general power of attorney remains in force unless expressly revoked or determined by the death of either of the party. A special power of attorney will be in force until the specified act is not completed. Duration of the power will depend upon the type of the attorney or there may be a fixed period of power granted by the principal which must be included in the deed.
What is the validity of the POA?
It is imperative that people understand that the termination or revocation of a POA can happen only if one of the two holders dies i.e. the grantor or the agent or it can happen through some other legal methodology.
A specific Revocation deed is required to be undertaken for this process to be completed.
All such procedures that are carried out are done so under the ambit of the Power of Attorney Act, 1882.
What precautions should I take while creating a Financial Power of Attorney?
With a power of attorney, an agent is often entrusted with important decisions. And the agent may have access to some or all of Principal’s money or other property. If the agent is not trustworthy, serious problems can result. For example, if the agent is dishonest and runs away with Principal’s money, it may be difficult or impossible to get the money back. An agent is not permitted to use principal’s property for his or her own benefit unless he is expressly authorised to do so. Also, a principal will ordinarily be bound by the agent’s acts (even foolish acts) and will be responsible for the agent’s negligence while the agent is acting for the principal. For example, if an agent is authorized to manage your financial affairs and signs a contract to purchase something on your behalf, you will ordinarily have to pay for it, like it or not. It is obviously important to choose a trustworthy agent; if no trustworthy candidate is available, a power of attorney should not serve its purpose.
How can I get a Financial Power of Attorney?
A deed of power of attorney must be construed so as to include all powers necessary for its execution. There is no legal requirement that a power of attorney be prepared or reviewed by a lawyer. However, if important powers are going to be given to an agent, it is wise to get individual legal advice before signing a complicated form. A person who signs a power of attorney without fully understanding what it means, and without considering risks and alternatives, is asking for trouble. So, a power of attorney must be drafted carefully and after knowing all its clauses written in the deed document.
We have a team of experienced lawyers who can speak with you and draft a Power of Attorney. They will guide you on issues that you need to take into account when making this document.
How can a Power of Attorney Executed?
Step 1: Fill the Nexgen Financial Power of Attorney Data Gathering Sheet
Step 2: Nexgen Estate Planning, will Draft the POA, on your approval of the Draft typed on stamp paper of appropriate value.
Step 3: Then you need to visit the Sub-Registrar’s office with the lawyer and the two witnesses.
Step 4: One has to carry photocopy and original copy of POA to the Sub-Registrar’s office and also need to ensure that every person accompanying him/her has their valid identity proof with them.
Step 5: Signatures, fingerprints, and photographs will be obtained at the office.
Step 6: The POA seeker can collect it on the due date, i.e., after three to five days after the completion of all the formalities, from the office.
Is it necessary to get a Power of Attorney Registered?
It is mandatory to register a power of attorney of it deals with immovable property, but it is advisable to register a ‘Financial Power of Attorney’ to ensure that it authenticity increases an dit may be used when you are incapacitated.
If you happen to get incapacitated due to an accident or illnesses such as a stroke someone needs to have the authority to manage your financial and personal affairs. A power of attorney is a written document authorizing a person to take and implement financial and other decisions on your behalf. A Power of Attorney can cover how your finances are to be managed or how your assets are to be dealt with (selling your home, making investments, operating bank accounts, getting a reverse mortgage so that the money can be used for your care and well-being in case of an illness).
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