From time to time, a person may ask someone else to look after his affairs, for example if he is traveling abroad or going into a hospital. The legal document that records this transfer of authority is known as a power of attorney. While a general power of attorney may encompass all of an individual’s affairs, including his health or personal dealings, a financial power of attorney relates only to financial matters. In Ohio, Chapter 1337 of the Ohio Revised Code sets out the legal provisions that govern the use of financial powers of attorney in the state.
The person who signs over control of his financial affairs is known as the principal. The person who takes over control is known as the attorney-in-fact. The attorney-in- fact should be over the age of 18 and may be a relative, friend or professional adviser such as an accountant or lawyer. Section 1337.18 of the Ohio Revised Code contains the correct legal wording to create a financial power of attorney.
Although the exact terms of each document vary according to individual circumstances, most financial powers of attorney contain broad general powers, authorizing the attorney-in-fact to operate bank accounts, sign tax returns and sell property. In certain situations a principal may sign a document to grant a special power of attorney to an attorney-in-fact, authorizing him to transact a specific item of business, for example the sale of a car or the completion of a tax return. Generally the power terminates at the expiration of this specific event.
Durable Power of Attorney
The law provides that a financial power of attorney is invalid if the principal becomes mentally incapacitated. If you want to make sure that your power of attorney remains valid in these circumstances, you must sign a “durable” power of attorney. A durable power of attorney remains in force even if the principal becomes legally incapable of entering into financial transactions. To be durable, the power of attorney must contain specific wording as outlined in section 1337.09 of the Ohio Revised Code.
Springing Power of Attorney
In most cases, a financial power of attorney becomes effective upon signing. In certain circumstances, however, a power of attorney states that it will only take effect at a specified future date or when a particular event occurs, for example if the principal becomes mentally incapacitated. This is known as a springing financial power of attorney. If you are considering entering into a springing power of attorney, a lawyer can offer advice regarding the most appropriate wording to ensure that it takes effect when required.