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Power of Attorney

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A Power of Attorney (POA) is a written document created by one person, known as the principal, to appoint another person as his or her agent. This agent will act on behalf of the principal in matters of business and personal affairs. An ordinary POA can be limited to one transaction or the agent can be given broader general powers to do anything the principal could legally do for him or herself.

The purpose of such instruments is to evidence the agent's authority to third parties with whom the agent will be dealing on behalf of the principal. A general POA remains in effect until revoked by the principal in writing or is revoked by virtue of the principal's death, incapacity or incompetence.

In contrast to a general POA, a Durable Power of Attorney (DPOA) remains in effect in spite of a principal's incapacity or incompetency. This type of instrument allows the principal to appoint an agent, while still competent, to manage his or her business or personal affairs in the event the principal later suffers a debilitating illness or injury.

The purpose of creating a DPOA is to allow a trusted agent (usually the principal's spouse or other family member) to continue to conduct business or personal matters on behalf of the principal over a period of time when the principal is unable to do so on his or her own.

If a person does not have such an instrument in existence prior to the onset of the disability, he or she will have no agent with any authority to act on their behalf. That person's spouse, family member or other concerned party, will have to go to the probate court and petition the judge for a partial or full guardianship over the principal in order to get authority to act on behalf of the incapacitated person.

The probate court process can be time consuming, expensive and can cause unwanted delay in the execution of necessary business and personal matters.

In addition, the petition may be contested and other persons within the family may feel compelled to object to the person seeking guardianship of the incapacitated person. This can lead to contested hearings and more delays in obtaining authority to act on behalf of the person needing assistance.

Having a DPOA in advance of any illness, injury, or mental deterioration will save the family time, money, frustration and stress. Further, the principal gets to choose the person he or she believes will represent their best interests.

A DPOA, like a general power of attorney, also remains in effect unless revoked by the principal in writing (before any incapacity) or until the death of the principal.

There are two methods that a principal can use to give his or her agent authority to act under the general and durable powers of attorney. First is by giving the agent the power to act effective at the moment of signing (upon execution).

For example, a principal has a specific piece of real estate for sale and has an offer to buy presented to him that he has accepted. The date for closing on the sale is set for a time the principal knows he will be out of state. The principal can have his attorney draft a limited POA for that specific transaction and execute it. This gives immediate authority to the principal's agent to act on his behalf at the real estate closing.

By effectively using a POA, the principal can have someone else conduct his business in one place while the principal is elsewhere either on vacation or conducting other business out of town. Once a specific transaction is complete, the limited POA terminates and the agent can not conduct any further business on behalf of the principal.

With a general POA, the principal conveys to the agent the authority to engage in a broad range of transactions. The written instrument will usually specify the powers the agent has and will also enumerate a list of a few, if any, restrictions on the agent's authority.

In this general power case, the agent's authority to act on behalf of the principal continues until the principal revokes the agent's power in writing or by the principal's death or incapacity.

Second is what is called a "Springing" Power of Attorney. This type of authority is not given immediately to the principal's agent until some future event occurs. This method of conveying authority is used in DPOA for the very reason that the future event is usually some serious incident that incapacitates the principal and necessitates the need for an agent to act on the principal's behalf.

With a springing durable power of attorney, the principal signs the instrument in advance but the event that triggers the power usually must also involve having at least two of the principal's doctors sign certificates that the principal is incapacitated and needs an agent to act on his or her behalf.

By using a springing DPOA, the principal retains all decision making authority until he or she lacks the present ability, as evidenced by mental infirmity, to make important decisions.

Caution: It must be noted that when a principal gives an agent a general or durable power of attorney, that agent can bind the principal to contracts or other obligations the principal may not have wanted. A power of attorney must not be given hastily or without careful fore thought. The principal must be as certain as possible that the agent is trustworthy and will put the principal's interests ahead of his own.

Compare Power of Attorney to Living Will