Nevada Financial Power of Attorney
1.1 Principal and Agent. Forgive the play on words, but a power of attorney is a very powerful document. In a power of attorney, the person giving the power is referred to as the “principal”, and the person holding the power is referred to as the “agent” or “attorney-in-fact.” If you give someone a power of attorney, what they do is treated as if done by you, if it is done within the scope of the power granted in the power-of-attorney document. In other words, you are legally bound by what your agent does in your name. It should not be given to anyone you cannot trust unconditionally, and, after you have signed the power, you should revoke it the moment you have concerns about the agent’s trustworthiness.
1.2 General and Limited Powers. A “general power of attorney” authorizes the designated agent to act on your behalf for all of your financial affairs. A “limited power of attorney” provides, as the name suggests, only limited powers to the agent. A limited power might give specific authority over a few actions or it might give broad power with some exclusions.
1.3 Statutory Form. The Nevada Legislature approved a statutory form that is, by default, a limited power of attorney, but, if you initial certain options, it can be a general power of attorney. In practical terms, a general power of attorney is not needed and, if given to the wrong person, can result in consequences, including tax consequences, for you and/or for the agent.
1.4 Durable Power of Attorney. Historically, a power of attorney was not effective when a person was legally incompetent or under a legal disability, but Nevada law allows a power of attorney to be effective even while a person is legally incompetent or disabled. A power of attorney that is valid during incompetency is referred to as a “durable power of attorney,” and the Nevada statutory power-of-attorney form is designed as such.
1.5 Health-Care Decisions. The statutory power of attorney does not authorize anyone to make medical or health-related decisions for you. A separate health-care power of attorney should be signed for that purpose.
2. SPECIFIC OPTIONS
2.1 Asset Types: In section E, you need to specify what assets the agent can control using this power of attorney.
(a) You have several options:
(1) You can initial selected subparagraphs for each type of asset to be subject to the power of attorney;
(2) You can initial subsection E.15 if the power of attorney is to apply to all asset types; or
(3) You can initial subsection E.16 and attach an Exhibit “A” that contains a list of specific properties that will be subject to this power.
(b) Most clients initial subparagraph E.15 to include all asset types.
2.2 Special Powers: Section F contains a list of powers that your agent will not be able to exercise unless you initial them. These should be carefully considered, and we recommend that you speak with an attorney before initialing any of them. Because these are very broad powers that are usually unnecessary and can trigger complications, most clients do not initial any of the items in Section F.
3. SECTION H
Section H is blank, and is a place to provide specific instructions, additional powers, or limitations. Most people leave this blank.
4. EFFECTIVE DATE AND EXPIRATION
Section I addresses the effective date and expiration date of the power of appointment.
4.1 Effective Date. Subsection I.1 provides the options for the date the power of attorney becomes effective.
(a) If you initial paragraph I.1(a), the power of attorney is effective immediately. This is the most commonly selected option, and we recommend it for most persons.
(b) If you initial paragraph I.1(b), the power of attorney will not become effective until you become disabled or incapacitated. With this option, the power of attorney “springs” into effect upon that event, making it a “springing power of attorney.” We do not recommend this option because it requires proof of your disability or incapacity and it makes it more difficult to use. At best, this will delay the ability of the agent to use the power, and some financial institutions may insist on a court order declaring you incompetent before they will honor this type of power. This option is used so that your agent cannot use the power while you are competent, but if you do not trust them to use it correctly when you are competent, perhaps you have selected the wrong person to have the power when you are incompetent.
(c) If you initial paragraph I.1(c), the power of attorney will become effective on the date specified. This is most frequently used for a power of attorney that is to be effective for a short period of time, such as while you are on an extended vacation or during a hospital stay.
4.2 Expiration Date. Subsection I.2 is used to indicate the date on which the power of attorney is invalid.
(a) If you initial paragraph I.2(a), the power of attorney will expire on the date specified. This is most frequently used in conjunction with paragraph I.1(c) for a temporary power of attorney.
(b) If you initial paragraph I.2(b), the power of attorney will expire when you die or when you revoke the power, whichever occurs first. This is the most commonly selected option.
5. SIGNING THE FORM
The power of attorney form must be signed and notarized. Acknowledgment before a notary public is required.
6. OTHER ISSUES
6.1 If the language in the statutory form is not specific enough for your needs, a custom form should be drafted for you.
6.2 The power of attorney form is prepared in a form that allows it to be recorded in the records of the County Recorder. The power of attorney form need not be recorded until it is necessary to do so, usually when the power of attorney is being used with respect to a real estate transaction.
6.3 Some banks, stock brokers, and other financial institutions do not like to accept power-of-attorney forms, and if you want your power of attorney to be honored by specific institutions, we recommend that you give a copy of the form to those institutions to find out if it meets the institutions’ requirements. Some institutions have their own form they prefer you to use.
NOTE: This memo provides general information only and does not contain legal, accounting, or tax advice. For brevity, this memo is oversimplified and should not be relied on for any particular situation.
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