Power of Attorney
A Power of Attorney form allows you, the Principal, to designate someone, an Agent, to act on your behalf when you are alive and cannot perform certain tasks for yourself. You have the ability to outline which powers your Agent will have. Some of these powers include buying and selling of goods, managing government benefits, and handling banking transactions. There is also an expanded powers section that allows your Agent to alter your estate plan by funding trusts and/or changing beneficiaries among other things. You can handpick the level of power that you give to your Agent or you can give them all of the power available to ensure that you have all bases covered. Of course, there are important things to consider when making these decisions and it is wise to seek the advice of counsel before doing so.
An Agent should be someone that you can trust. Many find naming an Agent difficult because it is hard to imagine a time when you are alive and also incapable of handling the business of your own life. Who will be available to help you? Who can you trust to step into your shoes? Decisions made in advance provide security and peace of mind. Decisions made when you are capable of making these types of decisions should be a priority. Take the time to face these difficult questions and retain an attorney to draft necessary documents for you so everything is in place if ever there is an emergency. Your Agent has a fiduciary responsibility to act on your behalf with only your best interest in mind. Agents are not permitted to act in their own self-interest or to do things that would jeopardize your financial well-being.
So now imagine that you have a Power of Attorney form in place and you still have the ability to make decisions such as naming an Agent and/or designating the level of power given to an Agent. Since your document was drafted and executed, some time has gone by and you want to change your Agent, add a successor Agent, or add more power. Maybe you have moved out of State, are recently married or are no longer close with your Agent? Executing a new Power of Attorney form will not automatically replace an existing Power of Attorney form.
A fully executed Power of Attorney form terminates upon the death of the Principal, upon the death or incapacity of the Agent when a successor has not been named, or when the successor Agent passes away or becomes incapacitated as the only remaining named Agent. If the Principal named his/her spouse as Agent, and then they divorce, the spouse no longer has the power to act on the Principal’s behalf. If the Power of Attorney is specific to a certain event/task and states as much within the body of the document, and the event/task has been completed the form will terminate. However, absent any of these circumstances, the Power of attorney remains in full force and effect unless the Principal revokes it in one of two ways:
- In the case where the Agent has not signed the Agent designation, the Principal may revoke the Power of attorney at any time by shredding the document; or
- If the Agent has signed, the Principal must notify the Agent in writing of their intent to revoke the Power of Attorney form and must also put any financial institutions, where the Power of Attorney may be on file, on notice that the document was revoked.
The Principal is typically the only person that can revoke their own Power of Attorney, aside from necessary intervention by the Court in extenuating circumstances, but only if the Principal has capacity at the time of the change.
We recommend that you revisit your documents at least every 5 years and sooner if any major life events take place. Please feel free to contact us for a free consultation to talk about a new or existing estate plan.
This article appeared in the November 18th edition of the Senior Gazette
This is not intended to be legal advise. You should contact your attorney to discuss your specific situation.