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A financial power of attorney, also known as a general power of attorney, allows your agent to make financial decisions for you. Typical decisions include the ability to pay bills, cash checks, access your bank accounts, and make other financial decisions you would typically make on a daily basis.
An agent’s powers are limited to those that you grant in a written document. The power of attorney lawyers at Robinson & Henry can help you understand what powers you should give your agents and what affect it may have on you.
In Colorado, a power of attorney is durable unless the power of attorney states otherwise. A durable power of attorney means that the agent can make decisions for you even if you are incapacitated. If you become disabled, your agent that you designate ahead of time can immediately step in and handle your financial affairs. This is important because it may avoid a costly conservatorship or guardianship proceeding that is needed if you do not have a power of attorney in place.
It is important to speak to a qualified estate planning attorney to draft your power of attorney. If you wish to include “hot powers,” which include such things as disclaimers, changing beneficiary designations, or making gift require specific authority, and various other powers, it is crucial that you understand the consequences and how to properly grant the power.
What happens to me?
The agent has authority with you, so your rights are not taken away. Only a conservatorship or guardianship can legally take away certain rights away from you.
You can revoke an agent’s powers under a power of attorney at any time. It is important to notify the agent in writing that they cannot act on your behalf. It is also important to notify any bank or other institution that the agent’s power is revoked. A bank or other financial institution may rely on the durable power of attorney inadvertently if you do not let them know the agent cannot act on your behalf.
How do I know the agent is not misusing the power of attorney?
An agent is a fiduciary, which means that he or she must act with the highest decree of good faith. The agent must keep records of their actions if those actions need to be reviewed.
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If you suspect the misuse of your power of attorney, you need to request an “accounting.” A lawsuit can also be filed against an agent for breach of fiduciary duty and other claims. if you prevail, the court can order return of the misused funds, attorney’s fees, and other damages.