Powers of Attorney

Power of Attorney

If you’ve ever sat through a pre-deployment legal brief, you’ve heard the mandate:  Make sure your spouse (or whomever is handling your financial affairs) has a power of attorney.  Sounds simple enough, but there is so much more to it.

Keep ‘Em Current

If you are in the military, you should always have a current powers of attorney.  Yes, it is extra important if you are deploying, but it is amazing to me how many surprises come up.  Like my friend whose husband was called to Haiti after the hurricane, and then discovered that her rented house had been sold and she had 30 days to find a new place to live.  Or the husband whose credit card was stolen while he was in the field, and his wife had to clean up the mess with the credit card company.  In these examples, and many others, the person at home would be unable to fix things without a power of attorney.

General Powers of Attorney

A general power of attorney gives the designated person the right to handle any type of legal and financial affairs on your behalf.  This includes the right to obligate you to large debts, such as buying a car or a house, or running up large credit card bills.  Actions taken with a general power of attorney will be as if you had taken the action yourself.  A general power of attorney can be a great tool or a danger, depending upon the person to whom you grant the power of attorney.  For this reason, you must consider carefully before granting a general power of attorney to any person.

Also, businesses are not required to accept powers of attorney.  They are less likely to accept a general power of attorney than a power of attorney that specifically addresses the necessary transactions.  This is to protect themselves and you.

Specific Powers of Attorney

Specific powers of attorney are great tools because they allow you to specify the particular transactions being authorized.   You may make a specific power of attorney very narrow or very broad.  Some examples include:

  • Homes (1 for each house owned) – you can specify that a person can pay the mortgage, deal with the mortgage company, pay the taxes, initiate, continue or terminate insurance coverage, refinance, purchase or sell the property, or whatever other things you might need.
  • Cars (1 for each car owned) – you can specify that your attorney-in-fact has the right to register, insure, pay taxes on, sell or buy a car for you.
  • Military Pay Issues – you may designate someone to act on your behalf when speaking to military pay offices.  Can’t guarantee that the office will accept it, but they certainly won’t speak to someone without a power of attorney.
  • Banking –  your agent may be permitted to speak with the bank regarding your accounts, and even open or close accounts on your behalf.
  • Insurance – you may authorize your agent to obtain, continue, or cancel various types of insurance.
  • Retirement and Investment Accounts – you may grant the power to contribute to, receive deposits from, or make changes to your retirement and investment accounts.
  • Income Taxes – your agent may be able to file, pay, receive refunds from, and otherwise deal with income tax issues.
  • Shipping Household Goods – even your spouse needs a specific power of attorney to initiate the shipment of your household goods to a new location.

Specific powers of attorney are fantastic tools and an important part of preparing your spouse, parent or friend to handle the crazy things that can happen when you are unavailable.  I recommend people keep a specific folder or small binder with all their powers of attorney so that they know exactly where to look when the need arises.

Ending Your Powers of Attorney

Your power of attorney will cease to be effective 1) on the expiration date, 2) if you die, or 3) if you revoke the power of attorney.  Revoking a power of attorney is complicated and often ineffective, as it requires you to destroy all copies of the document and also notify any and all potential creditors.  Therefore, it is strongly recommended that you put expiration dates on all powers of attorney, and make the document good only long enough to fulfill its purpose.

Planning and executing powers of attorney are an important part of your general financial readiness plan.  Take some time this week or month to sit down with your possible agent, organize a plan, and get those documents signed.  You will be much more prepared next time a short-notice event occurs.

About the Author

Kate Horrell
Kate Horrell is a military financial coach, mom of four teens, and Navy spouse. She has a background in taxes and mortgage banking, and a trove of experience helping other military families with their money. Follow her on twitter @realKateHorrell.
  • Shane

    My Ex-wife has been using a power of attorney to take out loans in my name, and she is using our married name, which she lost in our divorce. Is this legal? Am I obligated to pay these debts if they are taken out fraudulently..Our power of attorney Im pretty sure had an expiration date, but it was done at JAG, so I dont know..been divorced about 10 years now, but the debt occurred last year.

    • KateKashman

      Shane, powers of attorney should have expiration dates. If it was done at JAG, I am sure that it did. You should not be liable for any debts as they were taken out fraudulently, but it is probably going to be a pain and you are probably going to need to get a lawyer.

      Good luck to you!

  • Robyn

    So, For example, my husband is stationed in another state than when where I live and cant take leave to come down, but i need a car and he wants to use his USAA car loan to buy the car. Would a specific power of attorney help with that?

    • Robin

      I used a power of attorney to buy our car. I think it was a general POA. But you do have to have a copy of his ID.