Simply put, a power of attorney is when you give someone you trust the authority to decide matters on your behalf while you are still living. It generally involves two parties, namely, the principal and the attorney. The principal creates a power of attorney and authorises that person to make decisions on their behalf. This attorney is also sometimes referred to as the donor. The attorney is the person appointed to act on behalf of the principal. Therefore, it is essential that the principal feels that they can trust the attorney to work in their best interests. Typically, a power of attorney allows someone else to decide the principal’s personal matters, business and finances. A power of attorney will also give the attorney the authority to deal with the principal’s health care in some States.
What Authority Does An Appointed Attorney Have?The person you appoint as your Power of Attorney has the authority to make decisions regarding your financial and legal matters. However, it doesn’t empower them to make decisions about every aspect of your life. You can, however, write your wishes down as they pertain to your health and wellbeing and fill in an Advance Care Directive form to instruct them as to your preferences around health care, personal matters and living arrangements. The person can even make investments, sell property, conduct business and pay expenses on your behalf. A power of attorney form allows your appointed attorney to act on your behalf in matters relating to the following issues.
- Finances – Your appointed attorney may invest money, pay taxes and bills, collect income, and sell your property on your behalf.
- Business – The attorney may hire and fire your employees and sell your business.
- Personal – They may decide where and with whom you live, whether you can work or go to school, what foods should be included in your diet.
- Health Care – Your trusted attorney can consent to particular medical treatments on your behalf, within reason. They may also make medical decisions for you, depending on the State in which you live.
What Types Of Power Of Attorney Are There?Depending on your situation, you can create a general or an enduring power of attorney. In addition, you can add specific conditions and directions and limit particular decisions regarding the decisions needed to be made. A general power of attorney is predominantly used when the principal is still capable of decision-making but cannot do so for some reason. For example, they may be unable to decide due to an extended holiday abroad, working out of the town. It is sometimes otherwise known as an ordinary power of attorney. An attorney appointed under a general power of attorney can begin making decisions immediately after signing the document by the principal. Alternatively, the principal can nominate a particular date for the power to come into effect and have it written into the record. Unless a date is specified in the legal document, the general power of attorney ends when it is revoked by the principal in writing, usually with a Revocation of Power of Attorney form, or if the principal becomes legally incapacitated and unable to continue to make decisions for themselves. So, a general power of attorney ends if you lose capacity, while an enduring power of attorney continues if you lose the ability. With the general power of attorney, you can choose someone you trust, known as an attorney, to decide your financial matters while you still can do so. You can appoint a general power of attorney for a specific length of time, for example, where you require someone to manage your affairs while you’re abroad. Should you become no longer able to make such decisions, a power of attorney ceases to exist unless your power of attorney is given as security. It is known as an enduring power of attorney when you appoint someone to decide matters relating to your personal, health and financial issues. That person’s authority to act on your behalf begins when you choose. For example, you can appoint someone as your power of attorney for a future date, either specific or a date determined by circumstances or occasions, like a time when you are no longer capable of making such decisions yourself. An enduring power of attorney differs slightly. An enduring power of attorney is commonly used when the principal cannot make decisions for themselves due to some incapacity, either physical or mental. There are times when an enduring power can still be used when the principal can still make their own decisions. An enduring power of attorney is otherwise referred to as a durable power of attorney. An enduring power of attorney can commence immediately once the document has been properly signed and witnessed at a predetermined date or even after an event that triggers it. A trigger may be the incapacitation or death of the principal. Revoking an enduring power of attorney requires the use of the Revocation of Power of Attorney form or following the principal’s death. The principal can set restrictions on each of the above powers of attorney simply by including them in the drawing up of the document.
How Does One Make An Enduring Power Of Attorney?The person you choose to appoint as your attorney must be at least 18 years of age and fully understand the powers they are signing away to someone else. Specifically, they must be able to understand:
- What they can do when signing over power of attorney, for example, they can give specific instructions concerning the precise powers that the person will have,
- At what time a power of attorney comes into effect,
- That once the power comes into effect, the attorney has full authority to exercise that power, subject to any limitations which may have been included when drawing up the terms of a power of attorney,
- That should the person lose the capacity to decide, the power continues.
- While they maintain the capacity to decide, they may cancel a power of attorney at any time.
- Suppose they lose the ability to make decisions before revoking an enduring power of attorney. In that case, they won’t be able to effectively oversee how the other person uses the power given to them.
Choosing An AttorneyBefore doing anything, as with anything legal, it is advisable to fully consider who you want to make your power of attorney and speak to them about it. It is also a good idea to get some legal advice before signing the form. Power tends to go to some people’s heads, and some might not exercise authority in your best interests. Unfortunately, there have been times when an attorney has used their power in their own best interests, including using funds for their own needs. Therefore, it is vital that you can trust the person you appoint to take care of your affairs. The criteria for someone to be an attorney include:
- Being capable of making the decisions they are being given the authority to make.
- Be at least 18 years of age.
What Does An Attorney Have To Do?Specific obligations may differ from State to State, but there are significant legal obligations and duties that a person must carry out if they accept the role. Therefore, anyone considering the position of power of attorney should seek professional legal advice.
If I Have A Will, Do I Need A Power Of Attorney?A will doesn’t come into play legally until after you die, while you can appoint a power of attorney to attend to your affairs while you’re still living. It is still important to have a will, though, because your power of attorney automatically halts as soon as you die.
What Are The Responsibilities Of An Appointed Attorney?The appointed person is responsible for acting in the person’s best interests for whom they have power of attorney. For example, if the principal became legally unable to make decisions, a power of attorney would continue acting on their behalf. The appointed attorney should keep accurate records of everything they do, every decision they make. This record-keeping will be of benefit if anyone should challenge their actions. Power of attorney is an unpaid role. They can claim out-of-pocket expenses incurred while carrying out a power of attorney but must keep receipts as evidence. They are also personally liable to repay losses incurred due to acting improperly. They may also be found guilty of criminal offences and have to face an administrative tribunal.
Can I End An Enduring Power Of Attorney?While you have the legal capacity to make decisions, you can cancel your enduring power of attorney whenever you wish. This cancellation should be made formally, in writing, with a copy sent to the person you appointed as your power of attorney and anyone that person has dealings with, including banks.
Should I Consult A Lawyer For Legal Advice?An enduring power of attorney is about protecting your assets while you are still living and for when you pass. It is one of the most critical decisions you will ever make, so consulting an experienced lawyer for legal advice is a good idea. A good lawyer will ensure that you understand every aspect of completing the form when appointing an enduring power of attorney so you make the best decision for your circumstances. They can make sure that the correct language is used throughout the document to ensure that what you want is transparent so that your wishes can be met without question in your absence. An experienced lawyer can also make it harder for people to challenge your decisions.
FAQs About Enduring Power Of Attorney
1. How Do I Know If I Am Capable Of Making Decisions?Answer: If you can understand information relevant to decisions you need to make and the effects those decisions will make, you would be deemed capable. Other signs that you are capable of making decisions include:
- Your ability to remember the information necessary to make the decision.
- Your ability to use the information in your decision-making processes.
- Your ability to communicate your choices and views.
- Revocation of Power of Attorney (You will need one of these forms if you wish to revoke your decision to appoint an attorney.)
- Last Will and Testament (A will allows you to be very clear about what you want to be done with your estate and how you want your assets to be divided after you die. It also allows you to give clear instructions concerning issues like who will take guardianship of your children.)
- Codicil – (Additions, modifications, and removal of clauses from your existing will can all be made using a codicil. Without a codicil, these changes would require creating a whole new will.)
- Affidavit – (Affidavits are legal, sworn statements intended to confirm that what is written is true. For example, an attorney would complete an affidavit to confirm that they have the capacity to fulfil the responsibilities of an attorney when accepting the role.)