A power of attorney (POA) is a written document that authorizes
an agent (called an “attorney-in-fact,” even though any competent
adult can be named, and it need not be an attorney) to perform
certain acts on behalf of another person. The POA is especially
valuable when the nature and extent of an individual’s assets do not
warrant the expense of such devices as a revocable trust.
The POA is an inexpensive, practical, uncomplicated procedure to
plan for and protect persons who are or become unable to make
personal decisions for themselves or to manage their own assets.
Almost any adult can be named to serve on behalf of an individual
during his or her disability or in his or her absence.
A POA is usually considered when either the physical or mental
health of a person is deteriorating and someone else will be needed
to take care of that person and that person’s financial affairs. A
heart attack, stroke or accident can leave any of us in need of a legal
agent regardless of age or health. As such, virtually everyone should
consider a POA.
There are many advantages to a flexible and carefully drawn power
of attorney. And although it appears to be a simple document,
a POA should rarely be attempted by a lay person since state
law requirements and the needs and desires of the client must
be interrelated. Some of the advantages of a POA include the
following:
- The scope can be as broad or as narrow as circumstances require
or as the client chooses. - The power can be revoked at any time.
- It does not result in a judicial declaration of incompetency
(unlike a guardianship) and therefore certain rights (such as the
right to contract or the right to vote) are not lost by the disabled
person. - Implementation is quick and inexpensive.
- The transfer or retitling of property to the agent is not required.
- The client’s agent can nominate a guardian of the disabled
person’s property through this power, should a formal
guardianship later be required.
THE DURABLE POWER OF ATTORNEY
The POA should be “durable,” that is, lasting even if the individual
becomes legally or otherwise incompetent.
A durable power of attorney may avoid the necessity of a hearing
to adjudicate incompetency and appoint a guardian. The power can
be immediate (but kept “in waiting” by asking the attorney who
draws the POA to hold it until the appropriate time) or “springing,”
that is, it will spring to life only if and when the client becomes
disabled (the problem here though becomes definitional: by what
mechanism is it decided that the client is disabled?).
WHO SHOULD BE SELECTED AS ATTORNEY-IN-FACT
State law requirements must be the first consideration when
selecting an attorney-in-fact. In addition, the attorney-in-fact
should be someone in whom the client has the utmost trust and
confidence that he or she has the honesty and capacity to faithfully
carry out whatever tasks are necessary and allowable under the
power — and always in the best interests of the person who has
named the attorney-in-fact. It must be cautioned that the attorneyin-fact has the power to act in the place of the person who has
given the power of attorney. As such, if the attorney-in-fact proves
to be dishonest and misappropriates funds or such, the damage
may already be done before the person who has granted the power
(or someone else) can discover it.
POWERS TO SPECIFY
Powers can be as broad or as narrow as the client desires. The
client’s agent (attorney-in-fact) can be given broad authorization
to do whatever is necessary or desirable in handling real estate,
financial and investment interests, and business and personal needs.
The person who drafts a power for someone who is or may become
disabled or for someone who supports a disabled person should
consider including the following powers to:
- Authorize admission to a medical, nursing, or residential facility;
hospice; halfway house; group residence; or similar facility and
authorize medical and surgical procedures. - Fund a revocable trust, which may eliminate the need to
have a guardian appointed and may also eliminate ancillary
administration (administration of the disabled’s estate in more
than one state). - Provide care, custody, and control of the physical well-being of
any member of the family. - Establish residency in a nursing home or other facility.
- Make funeral and burial arrangements.
- Make decisions and obtain information affecting health care such
as the right to have access to and disclose medical records, employ
and/or discharge health care professionals, and give or refuse
consent to medical treatment. - Provide that third parties can rely conclusively on the power.
- Authorize the attorney-in-fact to sue any party who does
not honor the power if that refusal results in injury or lost
opportunity - Deal with the IRS and state authorities in all tax return
preparation and litigation matters (the attorney-in-fact must
obtain IRS Power of Attorney Form 2848). - Access safe-deposit boxes.
- Deal with life insurance and retirement plans.
HOW LONG DOES A DURABLE POWER LAST?
A durable power of attorney is presumed to continue until
shown to have been terminated, until the maker’s death, or until
revoked.
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necessary to find solutions to your legal concerns.