Understanding the Power of Attorney
The Power of Attorney is a legal document that grants an individual the authority to act on behalf of another person. This document is commonly used in situations where the person granting the power is unable to make decisions for themselves due to illness, injury, or other circumstances. The Power of Attorney can be a powerful tool for managing financial and legal affairs, but it is important to understand the different types of Power of Attorney and the responsibilities of the attorney-in-fact.
Types of Power of Attorney: Financial and Health Care
Powers of attorney originate from agency law. Imagine a busy 18th century business owner is a tea importing business in New York. His source of tea, of course, lay over the seas but his customers reside throughout New England. To place and order and ensure its delivery it is not as if he can just send a text, email, or the antiquated tool commonly referred to as a “fax.” He is left with one choice, an agent. Long before, the Law solved this problem, the need to be in two places at one time, and developed an entire area of law dedicated to granting a third party the authority to act on another person’s behalf, e.g., enter into contracts, discharge debt, respond to pleadings, etc., and the power of attorney became the instrument to express such a relationship.
Think of powers as contracts between you and your agent and can be as individualized as individuals and the problems they face are. However, for convenience we need condern ourselves with two broad categories: financial and health care decision-making. Financial powers grant a third party the power to pay your bills, borrow money on your behalf, sue someone, defend against a law suit, etc. Health care powers grant the authority to figure out your care plan, which care community is best, and even sign admission paperwork.
The top four terms used to describe powers of attorney:
- General Power of Attorney: This grants broad authority to the attorney-in-fact to act on behalf of the grantor in all legal and financial matters.
- Limited Power of Attorney: This grants specific authority to the attorney-in-fact to act on behalf of the grantor in a particular matter or for a specific period of time.
- Durable Power of Attorney: This remains in effect even if the grantor becomes incapacitated or unable to make decisions for themselves.
- Springing Power of Attorney: This only becomes effective if a specific event or condition occurs, such as the incapacitation of the grantor.
It is important to choose the right type of Power of Attorney based on your specific needs and circumstances.
The Role of the Attorney-in-Fact: Duties and Responsibilities
The attorney-in-fact is the person who is granted the Power of Attorney and is responsible for carrying out the wishes of the grantor. The duties and responsibilities of the attorney-in-fact can vary depending on the type of Power of Attorney and the specific instructions given by the grantor. Some common duties of the attorney-in-fact include:
- Managing financial accounts and assets
- Paying bills and expenses
- Making healthcare decisions
- Signing legal documents
It is important for the attorney-in-fact to act in the best interests of the grantor and to follow their instructions carefully.
The Importance of Choosing the Right Attorney-in-Fact
Choosing the right attorney-in-fact is crucial to ensuring that your wishes are carried out properly. It is important to choose someone who is trustworthy, responsible, and capable of managing your affairs. You should also consider their availability and willingness to take on the responsibilities of the role. It is recommended to choose someone who is familiar with your financial and legal affairs and who you trust to act in your best interests.
Common Misconceptions about Power of Attorney
There are several common misconceptions about Power of Attorney that can lead to confusion and misunderstandings. Some of these include:
- The attorney-in-fact has unlimited power: The attorney-in-fact is only authorized to act within the scope of the Power of Attorney document and must follow the instructions of the grantor.
- The Power of Attorney is only for the elderly: Anyone can benefit from a Power of Attorney, regardless of age or health status.
- The Power of Attorney is permanent: The Power of Attorney can be revoked or amended at any time by the grantor.
It is important to understand the facts about Power of Attorney to make informed decisions about your legal and financial affairs.
Empowering Yourself with the Right Legal Tools
The Power of Attorney can be a powerful tool for managing your legal and financial affairs, but it is important to understand the different types of Power of Attorney and the responsibilities of the attorney-in-fact. By choosing the right attorney-in-fact and understanding the facts about Power of Attorney, you can empower yourself to make informed decisions and protect your interests.
