It can be easy to take a person's health and mental capacity for granted. When a person is feeling healthy and has no history of mental illness, she may not see the need for contingency planning. If she becomes unable to make decisions -- such as those regarding finances -- a power of attorney can be helpful. Depending on how it is drafted, a power of attorney can allow a person to close bank accounts.
Power of Attorney
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Power of attorney is a legal document that grants a person (called an agent or an attorney-in-fact) the authority to act on behalf of the principal (the person designating the authority). Powers of attorney are very useful documents, but they must be drafted carefully. Without proper consideration, a power of attorney could bestow more authority than intended, putting the principal at risk for unintended -- and potentially expensive -- problems.
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General Power of Attorney
If the principal wants his agent to have the authority to handle every aspect of his affairs, a general power of attorney is used. The language creating a general power of attorney is broad: often, it is similar to "I grant my agent general, full and unlimited power and authority to perform any necessary act I could have done if personally present." According to the 'Lectric Law Library website, the general power of attorney must specifically state certain authority, such as the ability to make gifts. A general power of attorney does, however, grant the agent the ability to close bank accounts, unless the principal specifically withholds that power.
Limiting the Agent's Authority
Limited or special powers of attorney are narrower in scope. Caution must be taken in drafting special powers of attorney, however. A special power of attorney may only grant the agent the authority to handle finances. Such a grant would still enable the agent to close bank accounts, however. If a principal does not want an agent to have the authority to open or close bank accounts, it should be clearly stated in the power of attorney.
Importance of a Power of Attorney
A power of attorney allows the principal to hand-select a trusted agent to handle her affairs if she becomes unable to do so. Without a power of attorney in place, a person's family may need to petition the court to have a conservator appointed to handle her affairs. This process can be expensive. Furthermore, the principal has no say over who she wants her conservator to be.