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Power of Attorney

Do you have someone you can trust to be loyal to you, who you would like to act on your behalf from a financial, legal or health care perspective? Are there things that you need taken care of that you do not have the ability to do, but that person could? There are several different ways you can set up to give that person Power of Attorney to act on your behalf, but it is a serious decision and one that you should be informed about before signing any documents.

What is Power of Attorney? Does it have to be a lawyer?

In the United States, the Uniform Power of Attorney Act uses the term agent, who is a trusted person to handle the principal’s affairs within either a limited or extensive basis. The principal is the person being represented by the agent. The agent may be an attorney-at-law, licensed by the bar, but that is not required. The agent bestowed with a Power of Attorney privilege has a fiduciary responsibility to act on the principal’s behalf at all times, within the scope of the agreement between the two parties. Often, the agent is your spouse or child. The fiduciary responsibility requires complete loyalty from the agent to the principal and forbid the agent from gaining profit from the principal without his or her consent.

Can anything prevent a person I have made my agent from acting on my behalf?

You are unable to grant Power of Attorney if you have the requisite mental capacity. Mental illness or head injury may prevent such an agreement from being valid. It is also possible that a third party may challenge an agent’s decision with a lawsuit, a situation in which a court decides what is in the best interest of the principal.

How can I ensure that a Power of Attorney agreement is valid?

In some places, an oral agreement suffices, especially if witnessed. However, it is best to put the agreement in writing with dates and appropriate signatures and have the paper drafted by an attorney-at-law, or at least stamped and signed by a notary public.

What if I want to give someone rights to act over one aspect of my decision-making, but not all of them?

There are several types of agent you can assign, just be sure to specify in the original document what he is in charge of. Your options are not limited by this list, but here are some of the common possibilities:

  • Durable or enduring- This is the most comprehensive of the types. This agent has the power to act on your behalf until you are dead or incapacitated due to mental illness or physical injury. If you want that person to continue to be your agent after becoming incapacitated, you must specify that in the document, otherwise the agent loses Power of Attorney at that time.
  • Health Care- You can appoint someone, usually the person you appointed as your agent, to make decisions regarding your health care, which is useful in the latter stages of illness. In some jurisdictions, this is referred to as a health care proxy.
  • Springing- In some places, you can grant Power of Attorney to someone you trust that only takes effect in the event of your incapacitation or some other circumstance, as defined by the agreement. Determining whether or not the principal is disabled or incapacitated enough for such an agreement to take effect is a formal legal process and requires written testimony of a physician.
  • Financial- You may grant an agent to act on your behalf only regarding financial matters. This agent is often a securities broker who has been instructed to make specific trades at definite times or upon the occurrence of certain events.

I worry that I may become incapacitated, but I do not wish to grant anyone Power of Attorney. Are there any other options for me?

Yes, you can create a living will or a last will, or both. The living will defines what will be done with your assets while you are alive if you become incapacitated or otherwise unable to use them, and it specified how your health care should be handled in the latter stages of illness. The last will specifies how your remaining assets will be distributed upon your death. If you grant someone Power of Attorney with the proper privileges, a living will may not be necessary, but every person with assets should make a last will.