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In Texas, a financial power of attorney can allow someone to manage your financial and legal tasks, like paying your bills and signing contracts, but not making medical decisions or changes to your estate. You can choose to give someone broad authority or specify exact powers and limitations. A financial advisor can also help you understand which type of power of attorney you could benefit from for your estate plan. Here is what you need to know to assign financial power of attorney in Texas.
A financial power of attorney allows someone to execute financial or legal transactions on your behalf. This authority covers almost all interactions you can have with either the state or a third party except medical decisions, estate alterations or interpersonal relationships. For example, a power of attorney can sign contracts in your name, pay your bills and move your money, but they cannot force you into a divorce.
In Texas, the rules for power of attorney are similar to those in many other states. You can grant someone broad authority with only legal restrictions, or you can specify exactly what powers they have. You can also choose how long the power lasts: it can end if you become incapacitated, continue even if you are incapacitated, or start only under certain conditions.
Power of attorney can be extremely useful, but outside of estate planning or living wills it’s almost always best to use a limited grant. A general power of attorney is typically best if you are preparing against incapacitation or mental decline, making it a very important part of any late-in-life planning. Either way, make sure that any grant is tailored to your specific needs due to the vast nature of this authority.
As with most jurisdictions, only a few steps are required to assign power of attorney in Texas. They are:
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You must issue the grant in writing
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You must have the grant notarized
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You must be legally competent to make an assignment
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To apply to real estate transactions, the grant must be filed with the relevant county clerk
Legal competence means that you must be at least 18 years old, of sound mind, and you must make this assignment with knowledge and intent. That is, you cannot be tricked into giving power of attorney. (Contrary to popular perception this is a general rule for all contracts, as no element of an agreement is binding unless you intended to enter into it.) Unlike some jurisdictions, you do not need to have witnesses for a statutory power of attorney, although they are required for a medical grant.
Writing the grant is a little more complicated.
Texas does not have a required agency form, so you can write your own assignment. It must have a few required elements though. It must state the grant that you are making (if this is a statutory/financial grant or a medical one), and any limitations on this power of attorney. The document must name your agent and the date that it is signed or takes effect, and it must include your signature.
If the grant is a durable or statutory power of attorney, it must include statutorily specified language to that effect.
For a durable grant, the document must include the following language in either exact or substantially similar form: “This power of attorney is not affected by subsequent disability or incapacity of the principal.”
For a springing grant, the document must include the following language in either exact or substantially similar form: “This power of attorney becomes effective on the disability or incapacity of the principal.”
While Texas does not require a specific grant form, it does provide one. In general, unless there’s a reason to do otherwise, it’s good practice to use either this form or a similar one that you receive from a legal service.
This can help you to avoid mistakes, since a good power of attorney form will walk you through the required elements and your options. A form will ask you what specific powers you want to assign, and what limits you want to place on the assignment, helping you to make sure that your grant achieves your goals without creating potential problems.
Assigning financial (more properly known as “statutory”) power of attorney in Texas requires a written assignment. You must state your name, the grant of authority, the agent, and the date, and the document must be notarized.
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A financial advisor can offer important advice when creating a power of attorney so that it fits your specific estate planning needs. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
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While it may be tempting to save some money and plan your estate by yourself, you should still be careful with these DIY estate planning pitfalls.
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