A durable POA allows someone to help you with your financial matters if you ever become incapacitated—here's how to make one in Texas.
If you want someone to be able to deposit your checks at your bank, file your taxes, or even sell or mortgage your home, you can create a handy document called a power of attorney. A POA is a simple document that grants specific powers to someone you trust—called an "agent" or "attorney-in-fact"—to handle certain matters for you.
- What Types of Power of Attorneys Are Available in Texas?
- What Are the Legal Requirements of a Financial POA in Texas?
- Steps for Making a Financial Power of Attorney in Texas
- Who Can Be Named an Agent or Attorney-in-Fact in Texas?
- When Does My Durable Financial POA Take Effect?
- When Does My Financial Power of Attorney End?
What Types of Power of Attorneys Are Available in Texas?
You can make several different types of POAs in Texas. In particular, many estate plans include two POAs:
- a power of attorney for finances, which allows someone to handle your financial or business matters, and
- a power of attorney for health care, which allows someone to make medical decisions on your behalf. (This document goes by many different names, depending on your state. In Texas, it's called a "medical power of attorney.")
In most estate plans, these POAs are what are known as "durable" POAs, which means that they retain their effectiveness even after you're incapacitated. It's a good idea for most people to create these two documents, as they help plan for the unexpected.
To learn about other types of POAs, including non-durable (limited) and springing POAs, see What Is a Power of Attorney. Below, learn how to create a durable financial POA that is valid in Texas.
What Are the Legal Requirements of a Financial POA in Texas?
For your POA to be valid in Texas, it must meet certain requirements.
Mental Capacity for Creating a POA
Texas requires that the person making a power of attorney to have the ability to understand the nature and consequences of making the power of attorney. (In re Estate of Vackar, 345 S.W.3d 588 (Tex. App. 2011.) If you're helping someone make a POA and you're unsure whether they have the required mental capacity, consult an estate planning attorney.
In addition, Texas law requires that certain language, such as notices and warnings, be included in the POA. If you make your POA using a statutory form, reputable software program, or local attorney (see "Steps for Making a Financial Power of Attorney," below), the resulting POA should automatically incorporate the required language.
To finalize a POA in Texas, the document must be signed before a notary public.
Steps for Making a Financial Power of Attorney in Texas
1. Create the POA Using a Statutory Form, Software, or Attorney
Texas offers a statutory form (a form drafted by the state legislature) with blanks that you can fill out to create your POA. For a more user-friendly experience, try WillMaker, which guides you through a series of questions to arrive at a POA (or an estate plan) that meets your specific aims and is valid in your state. You can also hire a Texas lawyer to create a POA for you. Many lawyers will include durable POAs as part of a more comprehensive estate plan alongside a will or living trust.
Whatever method you choose, the process of making the POA will include selecting, from a list, the specific powers you want your agent to have, and initialing each one. For example, you might choose to grant your agent power over:
- Real property transactions
- Stock and bond transactions
- Banking and other financial institution transactions
- Business operating transactions
- Benefits from social security, Medicare, Medicaid, or other governmental programs or civil or military service
- Retirement plan transactions, and
- Tax matters.
You can also choose to grant your agent all of the powers in the list by initialing the "all the powers" line instead. An optional section in the POA allows you to further limit or extend your agent's powers if the standard list does not fit your goals.
In Texas, for your power of attorney to be durable, the document must explicitly state that it either becomes or remains effective when you are incapacitated. (In some states, POAs are durable by default, but this is not the case in Texas.)
2. Sign the POA in the Presence of a Notary Public
As mentioned above, you can't simply sign the document and call it a day. In Texas, you must notarize the POA. This means that you must sign it before a notary public, who will verify your identity and sign and stamp the document.
3. Store the Original POA in a Safe Place
Once you have completed the POA, store the original in a safe place that your loved ones can easily access, and let them know where to find it. (It won't do much good locked away in a safe that no one can get into.) If you become incapacitated, your agent will need the original POA to act on your behalf.
4. Give a Copy to Your Agent or Attorney-in-Fact
You should also give a copy of the power of attorney to your agent so that your agent is familiar with the contents of the document.
5. File a Copy With the Land Records Office
If you checked off "real estate transactions" as one of the powers you granted to your agent, you should also file a copy of your POA in the land records office of any county where you own real estate. (In Texas, this office is part of the county clerk's office.) This will allow the county clerk's office to recognize your agent's authority if your agent ever needs to sell, mortgage, or transfer real estate for you.
6. Consider Giving a Copy to Financial Institutions
You can also give copies of your durable financial POA to banks or other institutions that your agent might need to deal with in the future. This step might eliminate some hassles for your agent if your agent ever needs to use the POA. Banks can sometimes be finicky about accepting POAs; see Can Banks Refuse a Power of Attorney? for more details.
Who Can Be Named an Agent or Attorney-in-Fact in Texas?
Legally speaking, you can name any competent adult to serve as your agent or attorney-in-fact. But you'll want to take into account certain practical considerations, such as the person's trustworthiness and geographical location. For more on choosing agents, see What Is a Power of Attorney.
Texas allows you to appoint co-agents who are authorized to act at the same time, but it's usually advisable to stick to just one agent to minimize potential conflicts. However, naming a "successor" agent—an alternate who will become your agent if your first choice is unavailable for any reason—is always a good idea, as it creates a backup plan
When Does My Durable Financial POA Take Effect?
In Texas, your durable financial power of attorney will typically state whether it takes effect immediately or upon your incapacitation. If it doesn't specify, the POA will take effect immediately by default. If you choose to make the POA effective only if you become incapacitated, your POA will usually define how your incapacity is determined—usually a doctor declaring that you are incapacitated. While it might seem attractive, there are many practical reasons why this type of "springing" power of attorney is not usually advised. It's usually better to choose an agent you trust completely, tell your agent when to begin using the POA, and make the document effective immediately.
When Does My Financial Power of Attorney End?
Any power of attorney automatically ends at your death. It also ends if:
- You revoke it. As long as you are mentally competent, you can revoke your document at any time.
- No agent is available. To reduce the likelihood of this happening, you can name a successor (alternate) agent in your document.
- A court invalidates your document. It's rare, but a court may declare your document invalid if it concludes that you were not mentally competent when you signed it, or that you were the victim of fraud or undue influence.
Additionally, in Texas, if your spouse is named as your agent in your POA, that designation automatically ends if you get divorced. To be clear, your ex-spouse's authority to act as your agent ends, but your POA is still intact. So if you named a successor agent, that person would become your agent instead.
For more on Texas estate planning issues, see our section on Texas Estate Planning.