Financial Power of Attorney: Specific Powers Demystified

Financial Power of Attorney: Specific Powers Demystified

A Colorado Financial Power of Attorney is a legal document. It grants authority to an agent or attorney-in-fact to handle your financial affairs in situations where you are unable to do so yourself. This document grants both general powers and specific powers to the agent. It allows the agent to act on your behalf in a wide range of financial situations.

The agent’s general powers encompass broad areas such as real property, stocks, and bonds. On the other hand, the specific powers provide additional authority, although their purpose is often to limit the agent’s control over your financial affairs.

The Colorado Financial Power of Attorney grants the following specific powers. Below is a list of these powers in everyday language, highlighting their significance and implications.

Create Trusts

The agent has the power to create trusts on your behalf or for the benefit of your beneficiaries. These trusts will be structured similarly to the provisions outlined in your existing Will.

They may also align with other documents that govern the distribution of your assets after your passing.

Directing Trustee Actions

The agent can transfer any property you own to the trustee of a trust established under the power of attorney. The trustee will then manage and distribute the property based on the terms specified in the trust.

Specific Powers to Amend or Revoke Trusts

The agent has the authority to modify or cancel any trust created under the power of attorney. However, this action must align with the terms of the trust and your estate plan.

Direct Trustee

The agent has the authority to instruct the trustee of any trust to distribute income or principal from the trust for your benefit.

Specific Powers to Make Restricted Gifts

The agent can make gifts on your behalf, subject to certain limitations. These restrictions include specific dollar limits per recipient per year, based on the federal gift tax exclusion rules. If your spouse agrees to split a gift, the limits are doubled.

Create Joint Ownership

The agent has the authority to establish, cancel, or modify rights of survivorship, such as joint tenancy arrangements, for your real estate or personal property. These actions must be in accordance with your estate plan.

Amend Beneficiary Designations

The agent can change or revoke beneficiary designations, including beneficiary deeds, as outlined in your estate plan. Also, the agent is also authorized to provide copies of your current estate planning documents to other individuals as needed.

Delegate Authority

The agent has the ability to delegate some or all of their powers granted in the power of attorney. This delegation can be made to other individuals or corporate entities, following reasonable terms and guidelines established by the agent.

Waive Annuity Benefits

The agent has the authority to waive your right to be a beneficiary of a joint and survivor annuity. Additionally, they can also waive any survivor benefits under a retirement plan.

Exercise Fiduciary Powers

The agent can exercise fiduciary powers that you have the authority to delegate to them. This includes participating in the appointment and removal of a fiduciary (e.g., a trustee) and providing directions to the fiduciary regarding their actions.

Renounce and Disclaim Interests and Powers

The agent can choose to give up or reject any rights or powers that you have or that are granted to them through the power of attorney.

Release Powers of Appointment

The agent can release and exercise any powers of appointment granted to you, except for the exercise of a general power of appointment for your own benefit. A power of appointment is the authority given to an individual to determine the distribution of assets or property.

Manage Business Interests

In addition to the general authority to operate a business, the agent can act on your behalf in any business where you are a member, partner, or manager, such as a partnership or limited liability company.

Name Successor Agents

If the designated successor agent is unable or unwilling to serve as your agent, the agent named in the power of attorney can appoint one or more successor agents in accordance with Colorado law.

Manage Digital Assets

The agent is authorized to manage and transfer your digital devices and assets. This includes accessing and controlling emails, social media accounts, online banking, and modifying digital files. Moreover, the agent has the authority to obtain passwords and credentials associated with these assets, as well as manage and transfer them, including accessing and controlling digital devices and assets, modifying digital files.

A Colorado Financial Power of Attorney grants specific powers to an agent to manage your financial affairs in your absence. While granting these powers, it is crucial to consider your preferences and limitations for effective financial management. By understanding the scope of the specific powers and tailoring them to your needs, you can ensure that your agent acts in accordance with your wishes and protects your financial interests. Seeking guidance from an experienced estate planning attorney can provide valuable assistance in creating a Financial Power of Attorney that meets your specific requirements.

If you would like more on Powers of Attorney please click on this link to Chapter 23 of the 2017 Colorado Senior Law Handbook. Courtesy of the Colorado Bar Association.

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