What is a POA (Power of Attorney) and why are they important?

What is a Power of Attorney (and Why do I need one?)

A Power of Attorney is a legal document, usually conferred under state laws in the U.S., that allows one person to grant another person the legal right to act on their behalf. The person who signs the Power of Attorney is the “Principal.” The POA grants legal authority to another person (the “Agent” or “Attorney-in-Fact”) to make legally-binding decisions on behalf of the Principal about business, property, medical, finance, and other personal affairs, even if the Principal is not competent or physically able to make decisions.

Now you know the definition and you understand why it’s such an important document to have. What often matters most with a Power of Attorney is choosing the right “agent” for you. It’s a big decision. You want it to be someone you trust with your personal health and welfare. Someone who is going to make decisions for you if you aren’t capable of making them yourself. Choose a trusted family member or friend – a proven, trustworthy person – and let them know that they are your “agent.”

What kinds of POAs are available?

General, Special, Durable, Non-durable, Springing

The original term for the legal document was a “Durable Power of Attorney.” They were intended to provide a permanent and “relatively simple, inexpensive, alternative to court supervision of guardianship . . . upon the incapacity of the principal.”¹ Since then (about 1979) variations of the POA have been developed based on specific circumstances and needs of the Principal.

Durable POA – In line with the original intent of the document, a “Durable” Power of Attorney goes into effect on signing (some states also require witnesses and notarization) and is in force until it is revoked or the Principal dies.

Nondurable POA – Used when the Principal is temporarily unavailable to act on their own, usually for a specific important event such as a real estate transaction.

Springing POA – A “Springing” Power of Attorney becomes effective when a specific event chosen by the Principal occurs (for example, an illness or disability). A “Springing” Power of Attorney remains in effect until the Principal’s death, or until revoked.

Special POA – Principals may also choose to limit the specific powers granted, such as limiting decisions to a specific area (e.g. medical and healthcare decisions, business decisions, or certain personal affairs such as an adoption) or to a specific event (such as a sale or purchase of property overseas).

Though a POA grants the Agent the right to make decisions for you, it doesn’t waive your continuing rights to make your own decisions as long as you are able. In fact, you may rescind (undo) a POA at any time and you don’t need witnesses or even a notarization to do it in most states.

Why do you need a POA?

As described previously, if you or a family member or friend are temporarily or permanently unable to make sound judgements and decisions about personal finances, business matters, healthcare, or other personal matters, a POA provides a simple legal vehicle to allow someone else to make those decisions for you.

Most of families realize that they need one when they or a member of their family enters some form of long-term care (such as long-term memory care) for a chronic condition. Initially these are usually “Medical” powers of attorney, specific to dealing with medical and other healthcare conditions. Families may also want to consider obtaining a General POA if their loved one has any significant assets that may need to be liquidated in the future to help pay for care. Since we don’t know what life has in store for us, a General POA can come in handy in case of an unexpected accident or health condition.

How to obtain a POA

You do not need a licensed attorney to obtain a power of attorney. State attorneys general and legal help websites typically provide resources explaining how POAs work in your state and include online or downloadable POA forms. (See the links under Sources below).

Some states only require the signature of the principal, some require one or more witnesses, and some require notarization.  Simply follow the requirements.

Once completed and signed by all required parties, no further actions (such as submitting the form to the state or other agency) are required to make the original form active and in-force. It would be smart to check with your bank about their requirements because some require a certified copy.  Most other organizations will accept a simple copy of the original form.

Sources

The original “Uniform Law” adopted by many states in 1979 may be found at https://www.uniformlaws.org/committees/community-home?CommunityKey=d7d4819d-01de-42d4-9f79-a9ca7bbbf076 and https://www.uniformlaws.org/committees/community-home?CommunityKey=d7d4819d-01de-42d4-9f79-a9ca7bbbf076.

General discussion of (primarily financial-oriented) POA at the American Bar Association. https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/power_of_attorney/.

For the history of the power of attorney (back to 452 B.C.) see Catherine Seal, “Power of Attorney: Convenient Contract or Dangerous Document“ Marquette Elder’s Advisory Journal, Volume 11, Issue 2, Article 5, September, 2012 https://scholarship.law.marquette.edu/elders/vol11/iss2/5

Guidance and fillable PDF forms for General and Medical Powers of Attorney are available from the Kansas Bar Association website at: https://www.ksbar.org/page/DurablePowerAttorney and from the Missouri Department of Labor at https://dor.mo.gov/forms/2827.pdf.

Guidance for Elder Law Incapacity Planning, including why a POA is essential, Barrett, Cynthia L. (2012) “Elder Law Incapacity Planning,” Marquette Elder’s Advisor: Vol. 2 : Iss. 1 , Article 6, Summer, 2000 https://scholarship.law.marquette.edu/elders/vol2/iss1/6