Durable Power of Attorney
Many people do not understand the durable power of attorney definition, a power of attorney, a limited power of attorney and how the differences could significantly impact your life or your family's life.
A power of attorney (POA) is a written document that allows the principal (the person having the POA drawn up) to authorize the agent (also called an attorney-in-fact, although this person does not have to be an attorney-at-law) or personal representative to act on his or her behalf. It is one of the strongest legal documents that can be given to another person.
General power of attorney
A general POA gives the agent very broad powers to act on the principal's behalf. Unless otherwise specifically limited, the agent has powers over all of the assets of the principal including the right to buy and sell property, access private financial and legal records, and use, sell or discard personal property. Essentially, the agent can do anything with the principal's property that the principal could do. Every act performed by the agent within the authority of the POA is legally binding upon the principal and third parties dealing with the agent. Since a POA is such a powerful document, you should give this power only to someone you trust completely.
Limited power of attorney
A limited POA limits your agent's authority to act only on certain matters and gives the agent very specific powers. Usually this form of POA is used to authorize the agent to take a specific action, such as accept an offer to buy the principal's house, use the principal's car or care for the principal's children. It does not give you any power after the principal becomes incapacitated, which you can learn more about in the durable power of attorney definition below.
Limited power of attorney to act in loco parentis
The phrase in loco parentis means "in the place of the parent". This type of limited POA grants authority to anyone the parent chooses (such as a babysitter or nanny) to perform a range of functions such as picking up a child from school, buying food and clothing and consenting to medical treatment of the child in the event of illness or injury. All laws regarding medical regulations clearly provide that a minor may be treated in a true emergency, when the parents cannot be reached. In a non-emergency situation, however, consent is required before treatment can be provided.
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This limited POA transfers the authority to consent for the child's medical treatment to another individual. A medical facility cannot be designated with that authority; the parent must designate a specific person(s) to have such authority. Also, the individual designated must be an adult.
Without this type of limited POA, a day care center, school, store, hospital or clinic—fearing legal repercussions—may refuse to follow the directives of the babysitter or other agent, and require the specific authorization of the actual parent. This grant of authority assists the agent in the daily business of looking after the child, and can avoid unnecessary delays when caring for the child. It provides legal protection for the facility, as well as for the agent who might otherwise fear taking action on behalf of the child/parent.
What happens in the absence of a power of attorney
It is important to remember that by signing a power of attorney, the principal gives the full force of his or her signature and/or decision-making capacity to another person. Whatever that person does under the authority of the power of attorney carries the full weight of the law. Without a power of attorney, the principal may be left with no one who can legally represent him or her and maintain his or her finances or business while incapacitated. In these cases, the court appoints someone to serve as a guardian of his/her estate while he/she is incapacitated. The guardian may be a relative that the principal would not want or trust to watch after his or her finances and property. The court could also appoint a professional who charges a fee to the estate without having any idea about what the principal's wishes are.
Most powers of attorney are considered immediately effective. The person who is appointed gains this power immediately and can act on the power of attorney starting the moment it is signed. However, some become effective only after a determination that the principal has become incapacitated (see “Springing Power of Attorney” below.
Durable power of attorney definition
A durable POA is not affected by a person's incapacity. This differs from the non-durable POA, in which the agent's power to act for the principal (signor of the power of attorney) automatically stops if the principal becomes incapacitated. The durable power of attorney allows an agent to continue to act on the principal's behalf even after the principal suffers a stroke, dementia or other incapacitating illness or accident. The agent can use the principal's funds to pay bills, can contract for nursing home services for the principal's benefit and can make basic healthcare decisions unless otherwise stated in the principal's healthcare power of attorney.
It is wise for everyone over the age of 18 years old to execute a Durable POA, because once a minor child becomes an adult, his/her parents no longer have the right to act on his/her behalf, without having to be appointed by the Clerk of Court. The time, expense and emotional stress of having to be appointed by the court, can be easily avoided. As an another example, a parent may give a durable power of attorney to their trusted adult child so that, in the event the parent is disabled or incapacitated, the child can act on the parent's behalf and carry on routine matters. In many instances, this arrangement is far better than making the child the joint owner of the parent's bank accounts and other property and assets.
Springing power of attorney
A springing POA only becomes effective upon the happening of a specified event, which could be the principal's incapacitation. It is very important that the terms of the springing power of attorney be laid out clearly, including the method for determination of the incapacity—or other triggering event—and the person who decides whether the principal is incapacitated or that the triggering event has occurred.
A power of attorney is a powerful legal document that gives someone else the right to act as though they are you. Under the law, it is the same as if you committed the actions yourself. Before signing any estate planning documents, consult with an attorney at Haas & Associates, P.A. to understand the risks and benefits, and to ensure the documents are properly prepared.