durable power of attorney (or POA) is arguably the most powerful
instrument that you can create and is especially important in estate
planning. A POA is a
relatively insignificant and informal document that allows another
individual to legally act on your behalf.
POA can be as powerful or long-lasting as you want although they are
generally reserved for very specific occurrences and for a limited
time. The term durable
is inferred in this article as the purposes are for the POA to last
indefinitely unless otherwise rescinded.
signing a POA, you give the full force of your signature and/or
decision-making capacity to another person and whatever that person
does under the authority of that POA carries the full weight of the
law. In other words, if
you give someone a POA that allows him or her to sign a specific
contract on your behalf, it is just as though you have signed the
are many reasons to create a power of attorney but for the purposes
discussed here, those purposes will be limited to estate planning.
For this purpose, you must first decide what the purposes are
for creating the POA, who it assigns, the extent of their power, and
if there are time limitations.
Without a POA, there is nobody that can legally represent you
unless a court appoints someone to do so.
In that case, you may find that person could be a relative
that you don’t want or a professional who will charge the estate
and doesn’t even know you.
or General Power of Attorney
may create a POA that is either “general” or “limited”.
When you create a limited POA, the power only lasts for a
limited period of time or for a specific purpose.
You may create a POA that gives someone the right to pay
bills on your behalf but not make medical decisions or sell off your
entire stock portfolio.
“general” POA gives more latitude than a limited POA in that it
allows the person all rights that you retain for yourself.
General POAs should only be signed when you trust the person
completely and know beyond any doubt that they understand and will
act in your best interest and make decisions the same way you would.
of Attorney Effective Date
POAs are considered”immediately effective”.
The person whom you appoint gains this power immediately and
can act on that POA starting the moment it is signed.
Unless specified otherwise, the power gained by a POA is
other option, and one that should be considered is a “springing”
POA. In other words, it
is triggered by an event, and only that event will make the POA
effective. An example
would be if you were incapacitated and unable to form your own
rational decisions. Only
then would the POA become effective.
It is very important that the terms of the springing POA be
laid out clearly including the method for determination of the
incapacity and the person who decides whether you are indeed
POAs however, are somewhat harder to operate under.
The person who obtains the POA may be required to repeatedly
obtain evidence that you are incapacitated.
should consider executing a power of attorney but only if you have
someone that you fully trust. The
other option is to nominate the person that you want to act as your
guardian or conservator. That way, the court has the capacity to watch the person that
is handling your affairs and make them more accountable.
of Attorney Requirements
may sound like we’re splitting hairs here, but doing it this way
makes them accountable to the court that can immediately terminate
their acting capacity and hold the person criminally liable for
misdeeds. Whereas with
a general POA, the person’s only accountability is to you upon
your recovery or to your heirs upon your death.
POA is simple enough that it generally doesn't require an attorney
to produce the document. It
must however, contain certain elements and other elements are
generally included as a protection for the person issuing the POA.
As with most legal documents the POA must be dated.
This is to let other parties know that the POA is currently
For the purposes of a limited POA, it is highly recommended that
there be a termination date included in the document.
Without that termination, a POA can extend indefinitely.
The single exception to the termination provision is when the
POA is a durable POA. In
this case, the only way to terminate the POA is to effectively give
notice of termination.
The POA should also include the specific circumstances and authority
of the POA. In other words, you may be assigning a person a POA to sign a
given contract or make decisions of a certain nature. By limiting the scope of the POA, you restrict the powers to
those that wish to grant.
The POA must be witnessed. To
be on the safe side and make sure that other parties will accept a
POA, it is highly recommended that you have the document notarized.