Most people overlook the importance of having a financial power of attorney and only realize when something life changing happens such as a car accident or disease that leaves one incapacitated.
Getting financial power of attorney in Texas is a simple process that grants financial assistance during incapacity.
It is vital to empower someone to handle tasks like depositing checks, filing taxes, managing bank transactions and investments, or managing your property, you can create a power of attorney (POA). It’s a straightforward document granting specific authority to a trusted individual, your “agent” or “attorney-in-fact.”
This article will explain how to set up a financial power of attorney in Texas.
What Types of Power of Attorneys Are Available in Texas?
In Texas, you can create different POAs. Estate plans often include two key types:
- Financial Power of Attorney: Allows someone to manage your finances or business affairs.
- Healthcare Power of Attorney (Known as “Medical Power of Attorney” in Texas): Permits someone to make medical decisions on your behalf.
These are typically “durable” POAs, remaining effective even if you become incapacitated. It’s wise to have both to prepare for unforeseen circumstances.
What Are the Legal Requirements of a Financial POA in Texas?
In Texas, specific criteria must be met for your POA to be considered valid.
Mental Capacity for Creating a POA
In Texas, the person creating a power of attorney must possess the capacity to comprehend its implications (In re Estate of Vackar, 345 S.W.3d 588, Tex. App. 2011).
If you’re uncertain about their mental capacity, seek advice from an estate planning attorney when assisting with the POA.
Texas mandates specific language, including notices and warnings, in the POA.
When using a statutory form, trusted software, or a local attorney to create your POA (see “Steps for Making a Financial Power of Attorney” below), the necessary language is typically included automatically.
To complete a Texas POA, it must be signed in the presence of a notary public.
Steps for Making a Financial Power of Attorney in Texas
1. Create the POA Using a Statutory Form, Software, or Attorney
In Texas, you have several options for creating a POA:
- Statutory Form: Texas offers a state-legislated form with blanks to fill out.
- WillMaker: A user-friendly software that guides you through creating a valid POA.
- Legal Assistance: You can hire a Texas lawyer, often as part of a comprehensive estate plan.
Regardless of the method, you’ll choose specific powers for your agent, like real property, financial transactions, or tax matters, by initialing each one. You can also grant all powers by initialing “all the powers.”
An optional section lets you customize your agent’s authority.
For a durable POA in Texas, it must explicitly state that it’s effective when you’re incapacitated, unlike some states where POAs are automatically durable.
2. Sign the POA in the Presence of a Notary Public
As previously stated, in Texas, a simple signature won’t suffice. You must notarize the POA by signing it in front of a notary public who verifies your identity and adds their signature and seal.
3. Store the Original POA in a Safe Place
After completing the POA, keep the original in a secure yet accessible location, and inform your loved ones where to find it. It’s essential for your agent to have access to the original if you become incapacitated.
4. Give a Copy to Your Agent or Attorney-in-Fact
You should also give a copy of the power of attorney to your agent so that your agent is familiar with the contents of the document.
5. File a Copy With the Land Records Office
If “real estate transactions” is granted to your agent, file a copy of your POA in the land records office of each county where you own property (in Texas, part of the county clerk’s office). This ensures your agent’s authority is recognized for real estate matters.
6. Consider Giving a Copy to Financial Institutions
Provide copies of your durable financial POA to relevant institutions such as banks. This can simplify matters for your agent when they need to use the POA.
Who Can Be Named an Agent or Attorney-in-Fact in Texas?
Legally, any competent adult can be your agent, but consider trustworthiness and location. Texas permits co-agents but typically suggests one agent to avoid conflicts. It’s wise to name a “successor” agent as a backup if your first choice is unavailable.
When Does My Durable Financial POA Take Effect?
In Texas, your durable financial power of attorney can either be immediately effective or activated upon your incapacity. If unspecified, it defaults to immediate effect.
Opting for incapacity activation often requires a doctor’s declaration. However, it’s usually not recommended; it’s wiser to trust your agent, specify when they should use the POA, and have it effective immediately.
When Does My Financial Power of Attorney End?
A power of attorney ends upon your death and can also be terminated if you revoke it while mentally competent. It ceases when no agent is available, but you can prevent this by appointing a successor agent.
In rare cases, a court may invalidate the document due to lack of mental capacity, fraud, or undue influence.
In Texas, if your spouse is named as your agent and you divorce, their authority terminates, but the POA remains valid. If you named a successor agent, they assume the role instead.
Remember that legal requirements may change over time, so consulting with an attorney or using reputable legal software can help ensure your financial power of attorney in Texas is properly executed and legally effective.