All adults should have a financial power of attorney document that names someone they trust to make financial decisions and transactions for them if they are unable to do so themselves. An attorney can draft this form for you. You can also find do-it-yourself forms online.
Before opting for a fill-in-the-blank form, though, you need to understand what you’re getting. Here are the pros and cons of DIY power of attorney documents.
Pro: Lower Cost
An attorney could charge up to a couple hundred dollars to draft a power of attorney document or several hundred dollars to $1,000 or more for a package of estate planning documents, including a will, advance health care directive and power of attorney.
You can find free power of attorney documents online from state bar association websites that comply with state law. Services such as LegalZoom offer DIY power of attorney documents for less than $50. Some, such as Nolo, include a power of attorney document as part of estate planning packages that are available for less than $100.
Power of attorney forms that can be found online are convenient. You can download them from the comfort of your home and fill them out quickly – which might be an important factor if you need a power of attorney document quickly.
[ Read: The Ultimate Guide to Financial Power of Attorney ]
Con: It Might Not Conform to State Law
Be aware that DIY POA documents that aren’t state specific might not conform to your state’s law. Plus, state rules vary about what steps need to be taken to make the document legally binding, such as having it notarized. The document might offer general instructions about what needs to be done to make it valid (instructions that might not comply with your state’s law) or none at all.
An attorney, on the other hand, can draft a document that is specific to your needs and your state’s law. The attorney also will ensure that the proper steps are taken to make the document legally binding.
Con: It Might Give Your Agent Too Much or Too Little Power
There are several types of power of attorney – ranging from a limited power of attorney that gives someone power to make only certain types of transactions for you to a general durable power or attorney that offers the broadest powers. You might not understand the scope of powers you’re giving – or the limitations you’re placing -- with a DIY document. An attorney can help pinpoint which power of attorney is best for your situation, and which powers should be granted.
Con: It Might Be Too General
DIY documents tend to take more of a one-size-fits-all approach. That can create problems for your power of attorney when it comes time for that person to act on your behalf. That person’s power might be challenged if the wording in the DIY document is not explicit.
Con: It Could Expose You to Exploitation
A DIY document might not include safeguards to protect you from exploitation. For example, it might not include language that limits or prevents your power of attorney from gifting your money to others (including him or herself). It might not include a system of checks and balances, such as a requirement that a second power of attorney also be required to sign documents and authorize transactions.
An attorney will be familiar with the precautions that need to be taken and wording that should be included in the document to protect you from being exploited. Hopefully, the person you name as your power of attorney can be trusted. But it’s always a good idea to create safeguards.
If the cost of hiring an attorney is a stumbling block to getting a POA drafted, contact your local legal aid office or local area agency on aging (if you’re older or helping an elderly parent get estate planning documents). These groups might be able to help you get a POA drafted by an attorney at low or no cost.
[ Read: What You Need to Know About Being a Financial Caregiver ]