A power of attorney is a legal document that permits another individual to step into your shoes, and act on your behalf, within a set of confines that you establish. Its importance stems from the range of powers you (the principal) give to another individual (your attorney-in-fact) to handle your affairs concerning finances and property. This is important because it gives you the authority to empower someone you trust before it is necessary due to you being unavailable or unable to make some decision regarding your affairs. If you do not have a power of attorney in place, the process to get the courts to appoint someone to act on your behalf can be both expensive and difficult.

As the principal, you will have the authority to decide whether the powers you grant to your attorney-in-fact will be general or limited, whether your power of attorney will be durable or non-durable, when the powers will begin or end, and much more.

The goal of this publication is not to teach you everything you need to know about a power of attorney, but to give you an introduction to what a power of attorney is, and what it can do for you. The information in this publication is offered only for informational purposes and as a public service to the community. This information is not meant to provide legal opinions, offer advice, or be used as a substitute for speaking with a licensed attorney.

General vs Limited Powers

The difference between general and limited powers is very much what you would think. Granting your attorney-in-fact general powers will create a broad approach in which he or she is able to take action based on a wide range of powers that you authorize. And granting limited powers would be the exact opposite. By granting limited powers you may, for example, limit your attorney-in-fact to one power or to powers that only last for a limited amount of time.

As stated above, the powers you authorize give your attorney in fact the power to handle your affairs that concern finances or property. If you would also like to grant someone powers to make health care decisions for you as well, a Health Care Directive may be something you want to think about. (For information on a Health Care Directive see "What A Health Care Directive Can Do For Me") The range of powers you can grant your attorney-in-fact in a power of attorney document cover many areas including transactions concerning real property, personal property, bonds, shares, banking, business, insurance, gifts, and much more.

When creating a power of attorney it is vital for you, as the principal, to understand the range of powers you are authorizing your attorney-in-fact to have. This is imperative because any action taken by your attorney-in-fact, within the legal powers you authorized, will be treated as though you took the action yourself. This is why a power of attorney is a very powerful document and your attorney-in-fact should always be someone you trust. Keep in mind that the powers you authorize for your attorney-in-fact are not powers that you are “giving away” in the common usage of the phrase. Your attorney-in-fact only has authority to partake in dealings concerning the powers you have given him or her, and you do not lose the ability to take action for yourself in all matters you were legally able before having an attorney-in-fact.

Durable vs Non-Durable

Choosing whether your power of attorney will be durable or non-durable relates to the validity of your power of attorney if you become incapacitated or incompetent. A durable power of attorney means that the power of attorney remains valid after the principal becomes incapacitated or incompetent. Conversely, a non-durable power of attorney would become invalid if the principal becomes incapacitated or incompetent.

The differences between a durable and non-durable power of attorney sometimes work in close connection with the general or limited powers an attorney-in-fact is granted. For instance, Adam gives Brandi very general powers that encompass most of his property and financial matters. He does this because he wants to make sure he is covered if anything were to happen to him that would make him unavailable or unable to make decisions. Adam would probably want these general powers to be durable in nature because if he gets in an accident and is in a coma, he would like his power of attorney to remain valid, and Brandi to be able to use the powers he has given her.

On the other hand, imagine Adam is heading out of the country for a month. However, he is in the process of selling his home and would like Brandi to handle the transaction while he is away. By giving Brandi limited power through a non-durable power of attorney, it will allow Brandi to be able to step into his shoes for this singular real property transaction.

When Will The Powers Begin And End

When creating a power of attorney, it is within the principal’s discretion to decide when the power of attorney will begin, how long it will last, and, for the most part, when it will end. As the principal, you can decide that you would like the power of attorney to take effect as soon as you sign it, or you can elect for what is called a “springing” power of attorney that goes into effect when you become incapacitated or incompetent.

The end of a power of attorney can happen in a few different ways. One simple way is your power of attorney can be revoked at any time if you are still mentally competent. A court may also invalidate your power of attorney if it finds something wrong with it or if the attorney-in-fact you named in the document is unavailable. Your power of attorney is automatically terminated when you pass away, as well as, if your attorney-in-fact is your spouse and you two get a divorce. Keep in mind that if you elect to have a non-durable power of attorney, it will end when you become incapacitated or incompetent.

Popular Misconception

A popular misconception is that your spouse or another relative would be able to make decisions in your place so the need for a power of attorney is unnecessary. This is not true. There are some situations in which a court may allow someone who is not an attorney-in-fact to make financial or property decisions for another, but that is not something to build your plan around. If Adam and Brandi are married and Brandi has real property, personal property, and bank accounts solely in her name, the fact that they are married does not automatically give Adam access to the property, real or personal, or the bank accounts. This also trips up married couples who own a home jointly, because one spouse cannot take action that affects their joint owned home without the other spouse having a say. This means that if Adam and Brandi own their house jointly, and do not have power of attorney documents drafted, neither can unilaterally sell the house if the other were incompetent or incapacitated. 

For a more in depth discussion concerning a power of attorney for yourself or someone you know, please contact the Law Office of Renee Ashland by phone at 763-691-9883, or by email at bezel@reneeashland.com.