A power of attorney is a key component in your estate planning portfolio
Importance Of Power Of Attorney When You Own Rentals
Whether you own one or multiple rental properties, a power of attorney is a key component in your estate planning portfolio.
Power of Attorney in General
A Power of Attorney takes effect on its execution date, remains in effect if you become incompetent and financially incapable, and expires when you pass away. Alternatively, a Power of Attorney document can set forth an earlier date upon which the authority granted therein will terminate.
Your Power of Attorney “Agent”
Your “Agent” is the person designated in your Power of Attorney to manage your estate if you become incompetent or financially incapable. An Agent can be someone close to you, such as a spouse, child, or parent. However, rental property owners may more prudently choose a business partner or another rental industry expert as the Agent. The designated Agent should ultimately acknowledge their duty by signing a certification and acceptance of authority.
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Authority Granted in Power of Attorney
Agents have authority to handle matters ranging from business operations, claims and litigation, taxes, and real property transactions. For rental property owners, the Power of Attorney document can describe how your Agent should manage your assets to keep things running smoothly.
Transferring Assets to a Trust through Power of Attorney
A Power of Attorney can simplify the transfer of assets into a trust by enabling your Agent to transfer those assets on your behalf. For example, if you’re unable to finish funding your trust due to an unforeseen severe accident, the Agent can make the necessary transfers for you. If a Power of Attorney is not in place before you become incompetent or pass away, the remaining assets not already in the trust may need to progress through the probate process.
Power of Attorney Compensation
Your Agent is entitled to reimbursement for reasonable costs incurred in exercising their powers outlined in your Power of Attorney. Reimbursement of these costs may come from the assets your Agent is managing while you are incapacitated.
Source: Rental Housing Journal
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