#2) The Power of a Power of Attorney

Spread the love

By, Shirley Farmer, Attorney at Law

The information provided in this article is intended to give a general overview of the topic and is not intended as legal advice. For information specific to your situation, please talk with your estate planning professional.

Article #2, The Power of a Power of Attorney

A Power of Attorney is a legal document through which an individual gives someone else the ability to make decisions and take actions on the individual’s behalf. The person giving the authority is often called the “grantor,” and the person receiving the powers acts as the grantor’s representative and is often called the “agent” or “attorney-in-fact.” The person receiving the power is required to act in the grantor’s best interest when making decisions and taking action, and signing a Power of Attorney does not mean you cannot continue to manage your own affairs while you are still able. Generally, a Power of Attorney can be revoked at any time by the grantor so long as he or she has the capacity to do so. The powers given can be very broad or specific and take effect immediately or at a later date or event.

A Power of Attorney is a very important tool for any estate plan to ensure that someone will be able to act in your best interest and keep your affairs in order when you are not able to. If a person becomes incapacitated and does not have a Power of Attorney in place, a loved one may need to go through the legal process of conservatorship or guardianship just to be able to take care of things. This can be stressful and costly for your loved ones.

Not all forms of Power of Attorney are alike, and for a Power of Attorney to be useful while you are still alive but unable to manage things yourself it must contain certain language. It is important to know which form of Power of Attorney best meets your needs. Following are brief descriptions of the most common forms:

General Power of Attorney: this broad ranging document grants to the appointed representative the legal ability to do pretty much anything that you are able to do yourself. Your representative will be able to access your accounts, write checks to pay bills, receive funds due to you, and apply for benefits on your behalf, among many other things. Unless stated otherwise, the powers in this document are in effect as soon as you sign it, but without certain language included, the powers stop if the grantor becomes incapacitated.

Limited Power of Attorney: this version limits the powers given and identifies specific actions your representative may perform. It is sometimes also called a “special” Power of Attorney. For example, you can sign a Limited Power of Attorney granting a representative the authority to act on your behalf for the purpose of selling a house or managing a certain financial matter, but giving them no other powers.

Durable Power of Attorney: This form of Power of Attorney allows the appointed representative the ability to make decisions and take actions on your behalf while you are still alive but are unable to perform these duties for yourself. The common language is that the powers continue even if the grantor is “incapacitated.” The Power of Attorney document includes language restricting the activities of the representative to only those directly for your benefit, such as using funds to pay your care expenses or maintain your home and property while you are unable. Unless otherwise stated in the document, a Durable Power of Attorney is in effect as soon as you sign it. This is the most useful Power of Attorney for estate planning purposes.

Springing Power of Attorney: this type of Power of Attorney does not automatically go into effect when signed. With this type, language is included that states that the representative can only use the powers granted upon the occurrence of a specified future event or after the grantor has been determined “incapacitated.” Basically, this type lies in wait and “springs” into effect when needed. Specific language is required that explains what has to happen for the powers to activate and who determines the grantor’s capacity.

Temporary Power of Attorney: this kind comes with a time limit for how long the powers are granted. This can be useful if the grantor is going to be away for a known extended period of time. Another common use of a temporary Power of Attorney is when a person who is a parent or guardian of a minor child needs to convey certain legal abilities to another individual for a specific period of time, such as granting the ability to deal with educational and medical needs of enrolling a child in school or consenting to medical treatment.

Medical Power of Attorney: often known as an “advance directive,” this document grants authority to make medical decisions on your behalf and does not grant the representative any powers regarding your finances. The powers granted in this document can include the authority to make end of life decisions or be limited to only making a certain range of medical decisions.

Which type of Power of Attorney is right for you depends on your wishes and needs. You will want to consider whether your representative should have general power or if there are things you want the person to not be able to do, and whether the powers should go into effect immediately or only after you are determined incapacitated. There are pros and cons for each – for example, while a springing Power of Attorney means your representative can’t take any action on your behalf until you are determined incapacitated, it also means that someone will have to have a determination made regarding your capacity when the time comes, which can be problematic and could delay your representative’s ability to perform duties on your behalf. The Power of Attorney is a very useful tool for planning for your future. Check with your estate planning professional to decide which type of Power of Attorney is right for you!

Shirley D Farmer, Attorney
895 Commercial Avenue
Coos Bay, OR 97420
Phone: 541.404.4LAW (4529)