The Facts About Financial Powers of Attorney


Financial Power of Attorney

Have you ever thought about how you would handle your financial affairs if you were not able to leave your home or to make financial decisions for yourself? How would you make deposits or withdraw money from your bank account? How would you pay your bills? How would you hire someone to make repairs on your home. For most senior citizens, these are very important questions to ask.

Fortunately, in Georgia, you can use a document called a Financial Power of Attorney to appoint an agent to carry out your financial affairs in the event that you are not able to do so. The Financial Power of Attorney is a very useful tool for seniors. However, it should be used with caution. This booklet explains what a Financial Power of Attorney is and how you can use it to plan for unforeseen circumstances. This booklet also explains the problems that could arise from the Financial Power of Attorney document and how you can prevent financial exploitation when it comes to using a Financial Power of Attorney.


This section gives the definitions for words that you will often see in connection with a Financial Power of Attorney.

Administrator: the person appointed by the probate court to handle the affairs of a deceased person who did not leave a Last Will and Testament.

Agent: one who is authorized to act for or in place of another person. Your "Agent" is the person that you appoint to handle your affairs and make decisions on your behalf. Another term for Agent is attorney-in-fact.

Agent's Powers: acts that an Agent is authorized to perform by the Power of Attorney document.

Broad Powers: General authority given to an Agent over all of the Principal's financial affairs.

Conservator: a person appointed by a court to handle the property and finances of an incompetent person.

Durable Power of Attorney: a Power of Attorney that remains in effect even after the Principal becomes incapacitated.

Executor: The person named in a Last Will and Testament to handle the affairs of a deceased person.

Fiduciary: one who owes to another the duties of good faith, trust, confidence, and candor in acting for the benefit of another in the scope of their relationship. When you appoint an Agent, your Agent becomes your "Fiduciary".

Fiduciary Duty: the Agent's duty to act with the highest degree of honesty and loyalty toward the Principal and in the best interests of the principal.

Financial Exploitation: unauthorized use of a person's finances by another. Financial exploitation is a form of elder abuse.

Financial Institution: a business, organization or other entity that manages money, credit, or capital, such as a bank, credit union, securities broker, or investment company.

Financial Power of Attorney: a type of Power of Attorney granting an Agent the power to handle some or all financial matters for the Principal.

Guardian: a person appointed by a court to make sure an incompetent person's basic personal needs such as food shelter, clothing, medical care and treatrment, are met.

Medical or Health Care Power of Attorney: a type of Power of Attorney granting an Agent the authority to make decisions relating to health care or medical care and treatment when the Principal is not able to do so.

Power of Attorney: a document that grants someone authority to act as Agent or attorney-in-fact for the person signing the document (the Principal).

Principal: one who authorizes another to act on his or her behalf as an Agent. You would be the "Principal" who gives authority to your "Agent" using the Power of Attorney.

Revoke/Revocation: the act of terminating or canceling the Power of Attorney and ending the authority of the Agent to act for the Principal and can be done at any tome for any reason

Successor Agent: a person who is named in a Power of Attorney document to take over if the first Agent is not able or is unwilling to serve as Agent.

The Power of Attorney Document

The State of Georgia has a Georgia Statutory Form for Financial Power of Attorney that is set out in the Georgia law at O.C.G.A. §10-6-142. You can obtain one of these forms by contacting the Georgia Senior Legal Hotline at 404-657-9915 or 888-257-9519. Here are some important facts about the Financial Power of Attorney document.

Authority of Agent

In the Statutory Form for Financial Power of Attorney, you can specify which powers you want your Agent to have and leave out any powers that you do not want to give your Agent. You do this by simply placing your initials beside the paragraphs which state the powers that you want to give your Agent. You mark through any paragraphs which list powers that you do not want to give your Agent.

Example: You have selected your daughter to be your Agent. You would like to give her the power to write checks from your checking account and to make deposits into your checking account. You would therefore put your initials beside the paragraph entitled "Bank and Credit Union Transactions".

However, if you do not want your daughter to have the power to sell or lease your home, you would cross through the paragraph entitled "Real Property Transactions". It is a good idea to make your Financial Power of Attorney document as limited and as specific as possible, by giving your Agent only those powers that are necessary for your Agent to carry out your wishes. This could decrease the likelihood of financial exploitation by your Agent.

Capacity to Sign Power of Attorney

In order to sign a Financial Power of Attorney, you must have the capacity to understand:

  • a contract. Additionally, This includes the ability to understand the document you sign and the
  • consequences of signing the document. If you are under a guardianship or conservatorship,
  • any Financial Power of Attorney that you sign would be void while you are under that guardianship or conservatorship.

When Agency Goes into Effect

You can sign a Financial Power of Attorney that takes effect as soon as you sign it, or you can state a future date or circumstance that you would like for the agency to begin. In addition, you can state an event as the start date and/or end date for the Financial Power of Attorney. For example, you could state that you would like your Financial Power of Attorney to take effect when your doctor determines that you can no longer make financial decisions for yourself.

When Agency Ends

If you know that you only want your Financial Power of Attorney to last for a specific time, you can state the date that you want the agency to end. Otherwise, the Financial Power of Attorney would remain in effect until a conservator is appointed for you by the Probate Court (in the event that you become incapacitated); until you revoke the Financial Power of Attorney (revocation will be discussed later in this booklet); or until your death. Upon your death, the executor or administrator of your estate would handle the financial affairs of your estate. It is a good idea to have your Financial Power of Attorney document recorded in the deed records in the county in which you live.

Witnesses and Notaries

The Principal's signature must be witnessed by two people who are not related to the Principal. If the Financial Power of Attorney document gives the Agent the authority to make real property transactions or personal property transactions, the Principal's signature must be notarized. The Agent must sign an Acceptance of Appointment, and the Agent's signature must be notarized.

What Your Agent Can and Can't Do

When you appoint someone to act as your Agent, you are bestowing a great responsibility upon them. Although your Agent may act on your behalf when you are unable to do so, your Agent is limited to acting only on those financial matters to which you have given him or her express permission, and your Agent must always act in your best interests. Please note that the following is not a complete list, but examples,

If you authorize her/him, your Agent can:

• Pay your monthly bills for you

• Gain access to your bank accounts and deposit/redraw money from your accounts

• Buy, sell, or lease your home or other property

• Buy, sell, or lease any personal property (e.g. your car, furniture, jewelry, etc.)

• Borrow money or take out loans for you

• Prepare and file tax returns and necessary social security or unemployment insurance documentation

• Buy or sell your automobile

• Gain access to your safe deposit box

• Hire, and pay for, a professional for you (e.g. a lawyer, doctor, accountant, etc.)

• File any lawsuit on your behalf and defend against any lawsuits filed against you

• Buy and/or sell any stocks and bonds

Your Agent CANNOT:

• Use your money for his own bills, expenses or enjoyment

• Act in any way that is against your interest

• Pay himself a fee unless you have expressly authorized it

• Ignore your instructions

It is extremely important that you can thoroughly trust the person you have named as your Agent for your Financial Power of Attorney. You should never feel pressured by anyone into signing a Financial Power of Attorney, naming an Agent or giving your Agent a specific power. The authority you give your agent can have a major impact on you, and your decisions should be free of pressure, undue influence and coersion. Your agent (depending on the powers you assign to him) could sell your house, withdraw money from your accounts, or take a loan out in your name including a mortgage on your home. Unlike a conservator or guardian, a person acting with a power of attorney does not have to answer to a court. There is no formal oversight regarding decisions that your Agent makes.

In the Financial Power of Attorney document, you can limit your Agent's powers. You can decide to assign to your Agent only the power to have access to your safe deposit or to deal with any insurance transactions. You do not have to give your Agent Broad Powers unless you want to. Likewise, you do not have to give your Agent authority to sell or mortgage your home unless you believe that it is necessary.

For example: You decide to appoint your nephew as your Agent, and you give him Broad Powers. He would be able to show your bank the Financial Power of Attorney document appointing him as your Agent and have the power to take all the money out of your bank account. He would have the power to sell your home and the power to take out loans in your name, thereby creating debt.

Whom should you choose as your Agent?

Your Agent should be someone with whom you feel confident discussing your wishes. Your Agent does not need to agree with all your wishes, but she has a fiduciary duty to carry out your requests. For example, it would violate your Agent's fiduciary duty to take out a mortgage on your property if you do not want your home mortgaged.

It is best to appoint only one person to be your agent. You can decide to appoint two people to act jointly as your Agents. However, if your two Agents disagree and are unable to reach an agreement on how to carry out your wishes, this could cause problems and expense for you. If these are family members, it can result in family conflict. If you are worried about having someone in place if something should happen to your Agent, you could appoint one Agent initially, and then appoint a Successor Agent who would take over as your Agent if your first Agent could no longer serve as your Agent.

What To Do If You Suspect Financial Exploitation

If you suspect that your Agent is mishandling your finances, you should revoke your Financial Power of Attorney immediately. Here are the steps you will need to take:

1) Date and sign a document that states that you are revoking the Financial Power of Attorney. Include the date of the Financial Power of Attorney and the name of the Agent. This document should be witnessed and notarized.

2) Make several copies of the revocation.

3) You should file the original signed revocation in the deed records at the county courthouse.

4) Send your Agent a copy of the revocation via certified mail with return receipt requested. This is very important because the revocation does not become effective until your Agent receives it. Keep the returned certified mail receipt with your copy of the revocation.

5) Give a copy of the revocation to all parties who have been dealing with your Agent or would have reason to deal with your Agent. These parties could include, among others, your bank, investment companies, and real estate agent.

If your Agent continues to act under the revoked Financial Power of Attorney you should contact an attorney or call the Senior Legal Hotline at 404-657-9915 or 888-257-9519.

Last Review and Update: Jun 30, 2008