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Powers of Attorney: You've Got The Power!

A power of attorney is a document that allows you ( the “Principal”) to appoint a person or organization (the “Agent”) to handle your affairs for you. Sometimes, the power of attorney can take effect immediately. Sometimes, it only takes effect if for some reason you're unavailable or unable to handle you affairs yourself. A power of attorney can be as specific or as broad as you desire, and can confer whatever power you desire.

There are three basic types of powers of attorney: a special power of attorney, a general power of attorney, and a durable power of attorney.

Special Power of Attorney. The special power of attorney authorizes your Agent to act on your behalf in specific situations only. For example, you could authorize someone to sell a car or a house for you because you don’t know anything about real estate or cars, or to handle a specific business deal for you because you are in the South of France for the season and don’t want to be bothered with such mundane details.

People use the special power of attorney to authorize their Agent to handle all sorts of special tasks, such as performing banking transactions, entering safety deposit boxes, collecting debts, selling or mortgaging real estate, making estate planning decisions - the list is endless.

Another kind of a special power of attorney is a health care power of attorney (HCPOA). A HCPOA is a document that allows you to designate an Agent who will have the authority to make health care decisions on your behalf if you are unconscious, mentally incompetent, or otherwise unable to make such decisions. All HCPOAs need to be compliant with the Health Insurance Portability and Accountability Act (HIPAA), which is a federal act that allows your medical provider to share your medical information with your Agent. For your HCPOA to be HIPAA compliant, it needs to contain specific language that refers to the federal act. If you are going to have an attorney prepare a HCPOA, you should still discuss it with your Agent, and express your wishes, values and preferences regarding health care.

A HCPOA is different from a living will because it allows you to appoint someone to make health care decisions for you. A living will only allows you to express your wishes concerning life-sustaining procedures. Incidentally, both living wills and HCPOAs are considered "Advance Health Care Directives" because you're giving instructions on what you'd want to happen in the event that you become unable to make health care decisions in the future.

Normally, even if you have executed a HCPOA, you still have the right to give medical directions to physicians and other health care providers as long as you are able to do so. This document only becomes effective when you do not have the capacity to give, withdraw or withhold informed consent regarding your health care.

General Power of Attorney. A general power of attorney is very broad and gives extensive powers to the person or organization you appoint as your agent. Without getting into the specific powers, suffice it to say that it allows your Agent to pretty much act as you would be able to in all of your affairs. A general power of attorney can be a scary thing, so think very carefully before you give someone this much power over your life.

Durable Power of Attorney. Strictly speaking, a durable power of attorney is not a specific kind of a power of attorney, but is rather a feature that can be added to any power of attorney, be it specific or general. A durable power of attorney is any power of attorney that lasts through periods of incapacity. Without the durability feature, if you give a general power of attorney to your trusted son and you later become mentally incapacitated or incompetent, the power of attorney is of no effect while you are in such a state. This is usually completely counter to the intent of someone drafting a power of attorney, since the idea is usually to have a trusted Agent take over your affairs if you become incapacitated and unable to handle your own affairs. The durability feature is therefore a common feature to most powers of attorney. The general, special and health care powers of attorney can all be made durable by adding certain text to the document. This means that the document will remain in effect or take effect if you become mentally incompetent.

You can also execute a durable power of attorney document to prepare for the possibility that you may become mentally incompetent due to illness or an accident. In this case, you would specify that the power of attorney wouldn't go into effect unless a doctor certifies that you are mentally incapacitated.

Here are some more basic facts about powers of attorney:

• Assuming the Principal is still competent, a power of attorney can be revoked at any time by the Principal by simply drafting and signing a revocation.

• A power of attorney ceases upon the death of the writer. We often are asked questions such as, “I have my late husband’s power of attorney. That means we don’t need to do a probate, right?” Wrong! If a person gives you a power of attorney and then shuffles off to Buffalo, the power of attorney is automatically of no effect.

• An Agent is generally only held responsible for misconduct that is intentional, not for unknowingly doing something wrong. This protection for Agents is included in most power of attorney documents to help encourage people to accept the responsibility of being an Agent.

• There is always the possibility that the person or organization you appoint as your Agent either won't be able to serve or will refuse to serve. That's why it’s a good idea to appoint Successor Agent who can take over if needed.

• The Principal must be mentally competent at the time of the signing in order to make the document legally binding. If there is any question about the Principal's mental competence - which we are sure must not a problem for anyone reading this - a physician may be asked to certify in writing that the person understands the document and the consequences of signing the document.

• The signature on a power of attorney should also be notarized. Notarization makes it harder for someone to challenge the validity of the signature. It also allows the document to be recorded if certain transactions require a recorded document.

If you have questions or feel you may need a about a power of attorney, please contact us.

Caleb Morgan