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Specific Financial Powers, Part 2

Here is the second half of the list of powers you can give your attorney-in-fact in Nolo's Durable Power of Attorney for Finances.

  1. Insurance and Annuity Transactions
  2. Estate, Trust, and Other Beneficiary Transactions
  3. Transferring Property to Your Living Trust
  4. Legal Actions
  5. Personal and Family Care
  6. Pet Care
  7. Government Benefits
  8. Retirement Plan Transactions
  9. Tax Matters

(Read about powers 1-6 in Choosing Specific Financial Powers – Part 1 and The Power to Make Gifts.)

7. Insurance and Annuity Transactions

This power allows your attorney-in-fact to buy, borrow against, cash in or cancel insurance policies or annuity contracts for you and your spouse, children and other dependent family members. Under this power, the attorney-in-fact's authority extends to all your policies and contracts, whether they name you or someone else as the beneficiary—that is, the person who will receive any proceeds of the policy when you die.

The one exception to this rule covers insurance policies you own with your spouse. Under these policies, your spouse must consent to any transaction that affects the policy. So, if your attorney-in-fact is not your spouse, he or she will have to obtain your spouse's permission before taking action. Especially in community property states, even policies that are in one spouse's name may, in fact, be owned by both spouses.If you have questions about who owns your insurance policies, consult a lawyer.

If you already have an insurance policy or annuity contract, this power allows your attorney-in-fact to keep paying the premiums or cancel it—whichever he or she decides is in your best interests.

With this power, your attorney-in-fact is also permitted to change and name the beneficiaries of your insurance policies or annuity contracts. This is a broad power, and it's a good idea to discuss your wishes about it with your attorney-in-fact. If you don't want your attorney-in-fact to change your beneficiary designations, make that clear. If you have strong feelings about whom the designated beneficiary of any new policies should be, you can discuss that as well.

8. Estate, Trust, and Other Beneficiary Transactions

This power authorizes your attorney-in-fact to act on your behalf to claim or disclaim property you get from any other source. For example, if you were entitled to money from a trust fund, this power would allow your attorney-in-fact to go to the trustee—the person in charge of the trust—and press your claim on your behalf. Or, if for any reason it would be in your best interest to disclaim the inheritance, your attorney-in-fact could turn down the cash.

9. Transferring Property to Your Living Trust

A revocable living trust is a legal structure you create by preparing and signing a document that specifies who will receive certain property at your death. Living trusts are designed to avoid probate, though some may also help you save on estate taxes or set up long-term property management.

If you've already set up a living trust, this power gives your attorney-in-fact the authority to transfer items of your property to that trust. But your attorney-in-fact can transfer property into your living trust only if you've given him or her authority over that type of property elsewhere in your document. For example, if you want your attorney-in-fact to be able to transfer real estate into the living trust, you must also grant the real estate power. And if you want your attorney-in-fact to transfer bank accounts to your living trust, you must also grant the banking transactions power.

10. Legal Actions

This provision allows your attorney-in-fact to act for you in all matters that involve courts or government agencies. For example, with this power your attorney-in-fact can bring or settle a lawsuit on your behalf. He or she can also accept court papers intended for you and hire an attorney to represent you in court, if necessary. Unless your attorney-in-fact is a lawyer, he or she may not actually represent you in court but must hire someone to do so. If you lose a lawsuit, the attorney-in-fact can use your assets to pay the winner whatever you owe.

11. Personal and Family Care

This is an important power. It gives the attorney-in-fact the authority to use your assets to pay your everyday expenses and those of your family. With this power, the attorney-in-fact can spend your money for your family's food; shelter; education; cars; medical and dental care; membership dues for churches, clubs or other organizations; pets; vacations; and travel. The attorney-in-fact is allowed to spend as much as it takes to maintain the standard of living to which you, your spouse, children and anyone else you usually support are accustomed.

If you regularly take care of others—for example, you are the primary caretaker for a disabled sibling or parent—this power would allow your attorney-in-fact to use your assets to continue to help those people.

12. Pet Care

A properly executed power of attorney that includes the standard powers discussed in this section—for example, the banking power and the personal and family care power—should permit your attorney-in-fact to spend money to take care of your pets. But because the law isn't explicit about pets, you can grant this special pet care power to ensure that your attorney-in-fact has complete authority to provide care for your animals.

This power guarantees that your attorney-in-fact can pay for the ongoing care of your pets or animals, including food, veterinary care, grooming, toys, day care and temporary boarding or pet-sitting fees. Your attorney-in-fact will be permitted to care for your pets or animals in the same way as you have done.

13. Government Benefits

This power allows your attorney-in-fact to apply for and collect any benefits you may be entitled to from Social Security, Medicare, Medicaid or other government programs or civil or military service. To collect most government benefits, your attorney-in-fact must send the government office a copy of the durable power of attorney to prove his or her authority. Social Security is an exception, however. (See below.)

14. Retirement Plan Transactions

This power gives your attorney-in-fact authority over retirement plans such as IRAs and Keogh plans. Under this power, your attorney-in-fact may select payment options and designate beneficiaries—the people who will take any money left in the fund at your death. He or she can also change current beneficiary designations, make voluntary contributions to your plan, change the way the funds are invested and roll over plan benefits into other retirement plans. The attorney-in-fact may also perform any other actions authorized by the plan, including borrowing from it.

The power to change the beneficiaries of your retirement funds is a drastic one. Talk with your attorney-in-fact to be sure he or she understands your wishes with respect to this power.

15. Tax Matters

This provision gives your attorney-in-fact authority to act for you in all state, local and federal tax matters. With this power, your attorney-in-fact can prepare and file tax returns and other documents, pay tax due, contest tax bills and collect refunds. To file a tax return on your behalf, the attorney-in-fact must include a copy of the power of attorney with the return. The attorney-in-fact is also authorized to receive confidential information about you from the IRS.

The IRS has its own power of attorney form, but you don't need to use it. It is primarily designed to allow attorneys, accountants and other professionals to receive confidential tax information on behalf of clients. It is not a comprehensive, durable power of attorney for tax matters. This document gives your attorney-in-fact the power to receive confidential information from the IRS, plus the authority to handle any tax matters that arise.

16. Making Gifts

Read about giving your attorney-in-fact The Power to Make Gifts.