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Various Types of Power of Attorney
There are various types of Power of Attorney designations and which one is utilized will determine whether or not an agent (that is, the person who is assigned the power) is able to make an IRA withdrawal using a POA. They are:
General Power of Attorney - A general power of attorney allows the agent to act on behalf of the beneficiary (that is, the person whom has signed the legal document) in a number of situations. In most cases a general power of attorney allows the agent to act in any manner that is deemed to be in the best interest of the beneficiary;
Special Power of Attorney - A special power of attorney can be utilized to restrict activity of the agent. The special power of attorney may also be used for very specific reasons such as incapacity, someone who is out of the country who may need home repairs done or other specific purposes as designated in the document. In the case that it is specified in this type of document, you may need to ask "can POA be used for IRA withdrawals" before attempting to use it;
Healthcare Power of Attorney - A heath care power of attorney (sometimes called a health care directive) is generally used to allow someone to act on your benefit in the event that you become incapacitated or otherwise too ill to make a decision for yourself regarding your health care. In general, this type of power of attorney may not be used to handle any type of financial matters. The health care power of attorney is often used in place of a living will;
A durable Power of Attorney is not a different document. This language may be added to any type of a Power of Attorney. In effect, a durable power of attorney means that it lasts as long as it has not been revoked by the maker and the maker is alive. This means that the POA may be used in the event that the grantor is incapacitated for any period of time or permanently.
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Requirements for Use of POA
Each state and financial institution will have specific requirements about how your can use a power of attorney for handling financial matters. While it is advisable to contact the financial institution where funds are held if you have been granted a power of attorney, this is not always possible. Putnam Investments, for example, when asked can POA be used for IRA withdrawals offers the following guidelines:
The power of attorney must:
- Be dated within ninety (90) days of the date of the request;
- Be certified (that is re-notarized or have a statement from bank, or attorney that the grantor is still alive) within ninety days;
- Be certified that the power of attorney has not been revoked for any reason
A power of attorney is a very important document and may be even more important when you are dealing with parents who are aging, with a spouse or with other family members who may need care later in life. It is important that you understand all provisions that are involved as well as have the understanding that a Power of Attorney may be revoked at any time by the maker. Once revoked, the POA can no longer be used for any purpose. Another important item to note is that upon the death of the maker, the power of attorney becomes null and void.