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Power of Attorney

Contents

Introduction

A "power of attorney" is a legal instrument which grants another person the authority to act as your legal representative, and to make binding legal and financial decisions on your behalf.

While it is not particularly difficult to find power of attorney forms on the Internet, there is usually little or no accompanying explanation of what a power of attorney is, when you need one, or what type to choose. Given that the power of attorney can grant considerable power to a third party to act on your behalf and sign your name to legal contracts, you should give careful consideration to the person to whom you choose to grant those powers, and whether any limits should be imposed in the time the power of attorney will last, or in its scope.

Types of Powers of Attorney

There are, at a basic level, two types of powers of attorney. A "general" power of attorney is unlimited in scope and duration, and permits the named individual to act as your legal representative in relation to financial matters until such time as it is revoked.

A "specific" power of attorney imposes limits upon the named representative, and may restrict the scope of that person's powers to a single type of conduct or a single transaction. For example, the person could be granted the power to engage in financial transactions from a specific checking account, or to sign the closing documents for a specific real estate transaction.

Either type of power of attorney may be limited in its duration. That is, the document can specify a date after which the power of attorney will no longer be valid.

Ordinarily, power of attorney forms do not have to be registered with the state. However, if a power of attorney grants somebody the right to engage in transactions relating to real estate, it may be necessary to record the form.

Terminating a Power of Attorney

As long as you remain competent to manage your own legal affairs, you may terminate any power of attorney that you have previously executed. To the extent possible, you should collect and destroy the original powers of attorney and any copies, so as to avoid confusion or misrepresentation at a later date.

Appointing Multiple or Alternate Representatives

When executing a power of attorney, you may choose to appoint more than one person to act on your behalf. This may require that the two people act jointly, both signing any instrument in order for it to be binding upon you, or may permit them each to act individually on your behalf. Due to the difficulties that can arise from conflict between representatives, or from obtaining multiple signatures, under most circumstances lawyers typically recommend appointing a single representative.

You may also name an alternative representative (or a series of successors), who will act in the event that the first person you named dies, becomes disabled, or no longer wishes to act as your representative.

When Does a Power of Attorney Become Effective?

A power of attorney may become effective at the time it is signed. In the alternative, it may become effective at a future date described within the document, or it may become effective upon the occurrence of a specific future event or contingency (such as your becoming disabled).

Planning for Medical Disability

The greatest need for a power of attorney - the need most people have and perhaps most neglect - is one that is made in anticipation of a medical emergency or disability. That is, if you are in an accident, or suffer a disease or disorder that may leave you unable to articulate your own wishes, a medical power of attorney form allows you to choose in advance who will represent your interests, and can impose upon them the restrictions you wish. You may wish to make clear, for example, that the person is not authorized to override your "living will", an instrument which limits the right of doctors and hospitals to resuscitate you or to utilize invasive life support to keep you alive.

If you do not have a medical power of attorney, in the event of incapacity your loved ones may be forced to seek a court order to appoint somebody, usually deemed a "guardian", who will be authorized to oversee your medical care, where you receive your care, and to enforce your wishes in relation to your care. Further, a court may not appoint the person you would have preferred, and may not be willing or able to accept the representations of your loved ones as to your stated preferences for your care and treatment. While it can be uncomfortable to address this type of issue with your loved ones, it is better to do so in advance of a crisis rather than forcing them to go through a court process at what will already be an extremely difficult time.

Most people who engage in estate planning in anticipation of possible disability obtain both a medical power of attorney and a general power of attorney, which enables a trusted loved one to oversee their finances while they are incapacitated. In the event of a longer-term disability, having a duly authorized legal representative who can manage your bank accounts, process any income or insurance proceeds, and pay your bills, will almost always be necessary. As with the medical power of attorney, if you neglect to plan in advance it is likely that a court will have to appoint somebody to represent your interests. This person, generally called a "conservator", again may not be the person you would have chosen, and may in fact be a private individual who works at a significant hourly fee, paid out of your estate. It makes sense to plan in advance.

While some people will look to the Internet for this type of legal document, the easiest way to obtain the powers of attorney described in this section are as follows:

  • Most attorneys who create a general estate plan will issue powers of attorney as a part of that plan;

  • If you do not wish to utilize an attorney to draft an estate plan, you can almost always obtain free power of attorney forms, which have already been reviewed for legality in your state, from a hospital. All you have to do is ask. Hospitals offer these forms because it can save them a great deal of difficulty if people obtain these authorizations when they are healthy and competent, as opposed to requiring one of their administrators to guide family members through the process of petitioning a court for the appointment of a guardian or conservator, and dealing with the associated delays.

Please note that powers of attorney issued for the purpose of managing your assets in the event of disability are almost always unlimited in duration, that is, they are "durable" powers of attorney. Many financial institutions are reluctant to accept or rely upon powers of attorney which expire after a specific date, and some will refuse to accept them. If you are interested in limiting the duration of a power of attorney which takes effect in the event of disability, it makes sense to check with an attorney in your state to see what effect such a limit will have. Also, you may wish to limit any power of attorney of this type, such that it expressly recognizes your right to participate in medical and financial decisions, to the extent that you are able.

Free Power of Attorney Forms: