News

Powers of Attorney

February 18, 2016

By Raymond M. Roberts, Esq.

Durable and Non-durable Powers of Attorney

A power of attorney is a document that gives someone else the authority to act in your place and to do anything on your behalf that you could do yourself.  The person giving the power of attorney is called a Grantor.  The person to whom the power is given is called the Attorney-in-Fact.  The power of attorney gives someone else the authority to sign your name to documents or make bank transactions on your behalf.  The power of attorney provides a safety net that allows someone else to handle your affairs when you are unable without the need for court proceedings.  One word of caution is warranted.  There are two categories of powers of attorney: durable and non-durable.  A durable power of attorney survives your becoming incapacitated.  A non-durable power of attorney ends if you become incompetent or disabled.  If you are executing a power of attorney as a matter of convenience, a non-durable power may suffice.  However, if you’ve been diagnosed with a some debilitating disease, you will want a durable power so that your loved ones can avoid the cost, not to mention the anguish, of having you declared incapacitated and having the court appoint a guardian.

Types of Powers of Attorney

There are actually many different types of powers of attorney.  You can grant someone a financial power that would give him or her authority to handle your financial affairs.  You can give someone a medical power of attorney, which will give someone the authority to make medical decisions for you in the event you are unable.  You can give someone a very limited power of attorney to act in one specific instance, for example, to sign a deed for you if you are unable to attend a closing.  You can have a “springing” power of attorney.  A “springing” power is one that does not become effective until some specified event occurs.  So, if you are afraid that you may become too frail or otherwise incapacitated in the future and want to plan for that event, but don’t want to give anyone the authority to act on you behalf until then, a springing power of attorney is the proper instrument to use.

Powers of attorney can be limited or very broad.  You must decide how much authority to give your attorney-in-fact.  There are pre-printed forms available, but these may not address your needs.  Further, these forms may give your attorney-in-fact more authority than you would like.  Only you can decide how much authority you give the attorney-in-fact.  Always be careful to limit that authority only to those functions you wish to have the attorney-in-fact handle.

The main thing to keep in mind when giving someone power of attorney is that you are giving that person authority to act on your behalf.  Make sure that you choose someone who will act in your best interests, someone you can trust.  In a recent case, a woman gave a power of attorney to one of her sisters.  The attorney-in-fact went to the bank and transferred all of the money in the woman’s account to herself as a gift, an act that was permitted under the power granted her by her sister.  So just remember, be very careful with your choices!

When giving some one power of attorney, keep in mind that the attorney-in-fact may wish to renounce the authority at some point, or may become unable to continue in that role.  Always provide for a substitute attorney-in-fact in the event that your first choice is unable or unwilling to continue.  This can be accomplished by naming a substitute in the Power of Attorney or by granting the attorney-in-fact the authority to appoint his successor.  Keep in mind that if you choose the later, the attorney-in-fact and not you will decide whom that substitute will be.