What is A Power of Attorney?
– A Power of Attorney Legally Designates Another Person to Act on Your Behalf. –
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A Power of Attorney (POA) is a legal form or forms within an Estate Plan that allows you to designate another person to act on your behalf under certain circumstances. The person who is designated by you is referred to as an Attorney-in-Fact or Agent and is given the power to make short or long-term decisions for you, referred to as the Principal.
There are distinct types of POAs that can cover a range of decision making responsibilities. The most common decisions made involve financial issues and medical care due to an accident, sickness, or death leaving you incapacitated or incapable of making a sound decision.
The best way to ensure a POA is well defined and legally binding is seeking the legal advice of an experienced estate planning attorney. When you are ready to protect yourself and loved ones our knowledgeable team of lawyers are here to guide you through the process.
Continue reading to learn more about the reasons you need a Power of Attorney, the different types available, and what powers can be delegated. If you would like to speak with one of our attorneys about your unique needs, please feel free to contact our law office to schedule a free consultation.
“After moving my father into a nursing home for memory care, I quickly realized the importance of medical POA. Mike Abrate from Abrate & Olsen Law Group was able to clearly explain the health care decisions that the power of attorney granted me to make. I can’t thank Mike enough for all of his legal advice!”
– Steven V. – Sacramento, CA
Why You Need A Power of Attorney
While generally thought of as an estate planning tool used to make decisions later in life, there are many circumstances in which you should consider developing a POA including:
- Having a family history of or being diagnosed with a serious illness
- Being employed in a hazardous work environment
- Regular travel outside of the country
- Owning a business or property which requires maintaining in your absence
- Providing for children or loved ones in your absence
- Deployment in the military and not being easily accessible to make needed decisions
While planning for an unexpected accident, sickness or death can be uncomfortable, proactive preparation can help ensure the decisions made on your behalf follow your desires. When you are ready to plan for your future, you can rest assured our attorneys are here to assist you through every step of the process. We listen to your unique situation and requirements and will recommend and explain the best options available to you. Please contact our office to talk about your current needs.
Understanding the Four Types of Power of Attorney
When you are considering a POA, it is important to understand the four types of legal forms available to achieve your goals.
General Power of Attorney: The attorney-in-fact or agent is given the power to act on behalf of the principal. This can include opening financial accounts, managing the personal finances, operating business interests, making gifts, or employing professional help for the principal. A general POA is terminated when the principal becomes incapacitated, dies, or revokes the POA forms. They can be a valuable tool when you are not easily accessible to make decisions, such as military deployment.
Special, Limited or Specific Power of Attorney: The designated agent is only given power to make decisions on your behalf limited to a specific area. For example, you delegate an agent to act on your behalf for specific business or financial decisions such as buying or selling assets.
Health Care Power of Attorney: While the General and Specific POAs focus on the financial areas of your affairs, a health care or medical POA focuses on your health decisions. Should you become unconscious, mentally incompetent, or otherwise unable to make medical decisions, this POA grants the agent to make the decisions for you or on your behalf.
In some states, you can include your wishes regarding life support. Additionally, some states will allow you to combine parts of a living will and a health care POA into an advanced health care directive.
Durable Power of Attorney: Like the General Power of Attorney, the agent is given power to act on behalf of the principal. However, it includes a durable clause which maintains the POA in the event the principal becomes incapacitated.
According to attorney Mike Abrate, “When you draft a durable power of attorney, a good practice is to stipulate that it cannot go into effect until a doctor(s), who you have specified, certifies you as mentally incompetent.” This provides you with an additional layer of protection and control over who must be involved in the process of activating the POA.
Should You Have Separate Forms for Financial and Health
You can create one POA that encompasses both financial and health care information, however our attorneys advise against this. “Separating financial and health care documents can make things easier for your family, agents and others who may need to review the POA.” According to Attorney Dan Olsen who continued, “Health Care Power of Attorney forms can include more personal details and beliefs not required for financial decisions. Likewise, health care professionals do not need to comb through your financial information while providing you care.”
While our estate planning attorneys advise separate POA for financial and healthcare information, naming the same representative as your trusted agent is a good practice. Should you believe it is in your best interest to split the responsibility between two agents Olsen notes, “Take into consideration the two may have to work directly with each other. Be sure they will be on the same page regarding your best interest or in line with your wishes.
“After being notified I would be deployed for a year, I was referred to the Abrate & Olsen Law Group to draft a financial POA. They listened to my situation and were able to clearly explain the specific power and types of decisions which could be made on my behalf. The whole process was much easier and quicker than I expected.”
– Tim L. – Sacramento, CA
Choosing A Trusted Agent or Attorney-in-Fact
The most critical decision you make when developing a POA is who you will appoint as your agent. The most common choices our clients choose include a spouse, adult child, relative, attorney, or trusted friend. No matter who you choose, it is important to be certain that the agent will act in your best interests, respect your wishes, and won’t abuse the responsibilities or powers entrusted to them.
When choosing your agent, they must meet three legal requirements:
- Be of legal age of majority in your state
- Cannot be an owner or employee of nursing homes or care facilities where you live or receive treatment
- Cannot currently be in a state of bankruptcy
“Requiring agents to keep up-to-date, accurate records of all transactions and decisions made on your behalf is a condition we include as part of every POA we create for clients,” says attorney Abrate. “Receiving regular updates of the agent’s actions allows you, or a selected third party, to ensure they are consistently acting in your best interest.”
Since the agent is acting as you, you can be held liable for any decisions they make. While you are legally protected against intentional misconduct from your agent they are not responsible for “unknowingly” doing something wrong. Early detection of any unintentional decisions made on your behalf can save you money or future legal issues.
What Powers Can Be Delegated to Your Attorney-in-Fact
The flexibility of a POA is what makes them a valuable part of a well-constructed estate plan. Within the various POAs, you can specify what decisions your attorney-in-fact is able to make on your behalf. Common powers granted to your agent can include five main interests.
Business Interests: You can give your agent the ability to invest, trade, and manage specific areas or all business transactions and decisions, including handling and claims or litigation matters.
Family: The ability to purchase gifts, employ professionals to care for you or family, and to buy, sell, or trade any or part of your personal property.
Finance: The control of your banking, tax, government and retirement dealings including, living trust and estate decisions. Additionally, financial powers can also allow your agent to control personal life insurance policies and continuing to donate on your behalf to charities.
General Authority: This allows your attorney-in-fact the broad authority to make any decisions you would have the ability to make if you were present.
Real Estate: With this you are able to give complete or selective power to your agent to buy, sell, rent and otherwise manage any real estate owned by you including residential, commercial or personal use.
Ensure the Legal Validity, Protecting or Revoking the Legal Form
As with any legal document, the validity of POA forms are legally required to be entered into when you are mentally competent to do so. This is important to consider especially when there is a history of memory related health issues within your family. If you think there is a possibility a durable POA could be challenged, you can include a doctor’s report verifying you were mentally competent at the time of signing.
While a lawyer is not required to develop a legal POA, the best way to ensure the form has been drafted in accordance with local laws is consulting with an experienced attorney. They can provide legal advice regarding the types of POAs which will best fit your unique needs, ensure all required supporting documents are included, and see that any required signatures, notarizing, or certifications are made.
Once completed, you should keep the original document somewhere accessible to the agent in the event it is needed. We recommend against a safe deposit box or home safe only you have access to. You should distribute certified copies to your agent, attorney, other necessary parties, and file a certified copy with your County Clerk’s office if required. Be sure to discuss your decision and wishes with immediate family members who could be affected.
Should circumstances in your life change, revoking the POA is a relatively straightforward process. First notify your agent in writing through certified mail. Next collect any copies which were distributed and if necessary notify any financial institutions, your attorney, and the Country Clerk’s office, that the agent’s power of attorney has been revoked.
Having a well drafted Power of Attorney which allows you to choose a representative to act on your behalf for financial and health decisions if needed is a great benefit. When you are ready, we are here to guide you through every step in the Power of Attorney process. With years of experience developing solutions with Estate Planning tools, we offer you and your family peace of mind your wishes and desires are accurately and legally documented.