Power Education on Power of Attorney (POA)

Contrary to what we see on TV an in movies, having Power of Attorney (POA) does not automatically grant absolute control over another.

Helpful Highlights

  • The person granting POA is the principal. The person acting as POA is the agent.

  • There are decision-making powers that the agent (POA) cannot possess, and the agent must act in accordance with the principal's best interests.

  • There are several different types of POA, all acting in different ways.

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Definitions

Power of attorney, or POA = A legal document giving an attorney-in-charge or legal agent the authority to act on behalf of the principal.

Principal = The person who is granting power of attorney (POA) to someone. The person for whom decisions will be made. In other words, your loved one is the principal.

Agent = The person who is given power of attorney (POA) privileges. The person making the decisions. In other words, you or someone else are the agent.

Durable = The power granted in a POA is effective even when the principal is incapacitated (unconscious or mentally incompetent) and is only terminated upon their death, if revoked, or if deemed unfit by a court of law.

Non-durable = The power granted in a POA is terminated should the principal become incapacitated (unconscious or mentally incompetent) and otherwise terminates upon their death or if revoked.

Limited or Special = The power granted in a POA is limited in some way, such as to a single transaction, a certain type of transaction, or to a limited amount of time.

A power of attorney (POA) grants an agent the ability to make decisions on behalf of the principal. The authority to make these decisions must be legally given and specifically outlined. The agent can be granted limited or absolute authority to make decisions relating to health, property, or finances. Having a POA is common and especially useful when the principal is incapacitated and unable to make their own decisions.

An agent cannot act in a way that the principal has not specified and given permission, nor can they act in a way that is not in the principal's best interests.

What POA means for the principal (your loved one)

Creating a POA allows your loved one to develop a solid plan for addressing their future care needs and wants, offering them (and their family) invaluable security and peace of mind.

What POA means for the agent (you or someone else)

Your loved one has entrusted you or someone else, in advance, to act on their behalf should they become incapable of making decisions for themselves (or in the case of financial POA, are unavailable to sign off on transactions).

When POA takes effect

This depends on the type of POA.

Some durable powers of attorney take effect immediately after they are signed (and notarized, if required), while others take effect only after a specific event occurs or the principal becomes incapacitated by an illness or disability.

When a POA terminates

This also depends on the type of POA.

A durable POA endures when your loved one is incapacitated by an illness or disability. In the case of financial or legal transactions, the agent may also act on behalf of your loved one when they are not readily available to sign off on the transactions (i.e., they are absent or otherwise unreachable).

A durable POA terminates only if your loved one revokes it, if they die, or if it is invalidated by a court of law. A POA can also terminate if the agent is unable to continue carrying out the duties as defined.

A non-durable POA terminates if your loved one becomes incapacitated by illness or disability, as well as by revocation, death, court ruling, or the agent's inability to carry out the duties as defined.

Best interests and powers that cannot be granted

The fundamental rule governing the POA is that the agent is bound by law to act in your loved one's best interests. Therefore, the agent should be someone your loved one trusts implicitly.

There are also powers that your loved one cannot delegate and decisions the agent cannot make, such as:

  • Making or changing their will

  • Contracting marriage for them

  • Casting a vote for them

  • Making decisions for them after their death

  • Changing or transferring POA to someone else (unless exceptions are explicitly detailed in the document for this occurrence)

These are powers that, even if included in the POA document, cannot be transferred from your loved one to someone else.

There's more than one type of POA?

Yes, there are several types of POA and they all act differently. There may also be different levels of durability, timing, and scope of powers granted.

  • Medical or Healthcare

  • Financial

    • Durable (Statutory)

    • General (Financial)

    • Limited or Special

  • Tax

  • Real Estate

  • Vehicle

  • Revocation (revoking or removing POA powers)

RESOURCES

AgingCare

American Bar Association

Corporate Finance Institute (CFI)

FREEWILL

LegalZoom

Open AI - ChatGPT

No content in this app, regardless of date, should ever be used as a substitute for any direct legal advice you receive from your lawyer or other qualified legal professionals.

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