In fact, “only about a quarter of Americans currently have an advance directive – like a living will.”
A power of attorney is a legal document granting permission for another (an ‘agent’ or ‘attorney-in-fact’) to act on your (the ‘principal’) behalf. A power of attorney grants the legal right for a person to make health care decisions or manage other’s financial or health affairs in the event they become incapacitated. This person does not need to be a professional attorney but it is good advice to have a lawyer draft power of attorney documents. There are various types of powers of attorney and provisions to be included or excluded for every situation.
Types of Power of Attorney
Two basic types of power of attorney exist:
- A power of attorney for finances or property enables the designated agent to make decisions regarding assets owned by the principal such as a home, other real estate and financial accounts.
- A power of attorney for personal care enables the designated agent to make medical decisions on behalf of the principal. This usually is either a standalone legal tool or part of an advance directive accompanying a living will. These legal documents set forth the medical wishes of the principal in the event they are unable to express them personally.
When to Transfer a Power of Attorney
Any number of situations may arise in which a power of attorney should be changed. The most common are:
- Life-changing events (for example, a new marriage, divorce or death).
- When contact or trust in the current agent has been lost.
- In the event the current agent is no longer legally competent to make decisions, is terminally ill or has died.
Common Misconceptions Regarding Powers of Attorney
- A power of attorney can be signed at any time. NO. A power of attorney is only signed while the principal is legally competent to do so. If mental competency has lapsed, no changes may be made to an existing power of attorney.
- One standard power of attorney handles all matters. NO. The principal determines what authority to grant to a power of attorney in their unique situation, which is why it is best to be drafted by a legal attorney.
- A durable power of attorney survives the death of the principal. NO. All powers of attorney legally terminate upon the death of the principal. Their vested authority dies along with the principal.
- A power of attorney grants an agent the right to do as they please with the estate in question. NO. The agent named in the power of attorney has an overriding fiduciary obligation to make only those decisions in the best interests of the principal. However, this depends on the agent being a completely trustworthy individual.
- The agent of a power of attorney may delegate their authority to another. NO. Only the agent specifically named in the power of attorney may act on behalf of the principal. This authority cannot be delegated unless provisions regarding such a division of authority are clearly defined in the power of attorney agreement.
How to Change Your Power of Attorney
The only condition to be met when changing a power of attorney is the legal competence of the principal at the time of the change. When transferring a power of attorney, it is not necessary to notify the person currently acting as agent. However, there is a risk the former agent will continue to act in good faith and follow the directives of the power of attorney. Such actions may still be upheld as valid by a court of law in the event of a later conflict because proper notifications regarding the agent’s change of status were not completed.
When making changes to a power of attorney, utilize the professional services of a lawyer to ensure the new wording revokes all previous power of attorney documents and authority. A lawyer experienced in powers of attorney will also use adequate wording specific to the needs of the principal and their situation including or excluding necessary verbiage.
Provide copies of the new power of attorney documents where the principal conducts business relying on the power of attorney. Ensure the proper officials are aware of any previous agent and power of attorney who no longer has authority to conduct business on behalf of the principal.
The idea of constructing or changing a power of attorney may seem overwhelming. There are a variety of questions to consider and decisions evoking powerful debate or strong emotions among friends and family.
Bridge to Better Living® finds it important to know who the power of attorney is for their clients. We want to be sure the right conversations are being held. We respect the privacy and concerns of everyone we visit and assist.