A financial power of attorney is an instrument that allows one person to act for another in financial matters. The person making the document is called the principal. The person designated to act for the principal is called the agent. In general terms, a power of attorney empowers an agent to handle everyday financial affairs like paying bills or handling banking matters for the principal. A power of attorney can also be used when a person is not able to make decisions due to mental or physical incapacities. But when does the document become effective?

The Ohio Revised Code states that a power of attorney is effective when the principal executes the document unless the principal specifically provides that the powers become effective upon the occurrence of a future event or contingency. For instance, the document may state, “the Agent’s powers shall commence and be in full force and effect upon the occurrence of my disability, incapacity, or adjudicated incompetence.” These types of powers of attorney are described as “springing” because they spring into effect at a later date.  The principal may also designate in the document a person to determine whether the principal is incapacitated and unable to conduct his or her financial affairs.

But what happens if the principal has not authorized a person to determine incapacity? Likewise, what if the principal did name a person to determine incapacity, but he or she is unable or unwilling to do so? In that case, Ohio law provides that the power of attorney becomes effective when one of the following people provides a determination in writing that the principal is incapacitated within the meaning of the Ohio Revised Code:

(1)      a physician or a licensed psychologist who has examined the principal;

(2)      an attorney at law or a judge; or

(3)      an appropriate governmental official.

It is important to note that this process takes time. Most likely, a bank or financial institution will not honor a power of attorney until it is absolutely sure the agent has the power to act. In the meantime, the principal’s finances are left unattended. 

By making the power of attorney effective immediately, the principal can be sure that the agent may immediately and efficiently handle the principal’s financial matters. Indeed, the document can be used for convenience purposes if the principal is simply unable to leave his or her residence. 

When drafting a power of attorney, it is important to seek the assistance of an experienced attorney. That way, the document will clearly set forth exactly when the agent can legally assist the principal. Laribee Law, LLP is here to assist you.

Michael Laribee is a partner in the Medina law firm of Laribee Law, LLP. This article is intended to provide general information about the law. It is not intended to give legal advice. Readers are urged to seek advice from an attorney regarding their specific issues and rights.