A Power of Attorney document allows an individual (the “principal”) to appoint someone to act as an agent on his behalf. The agent, called an “attorney-in-fact,” though the agent need not be an attorney, can take care of important matters for the individual, such as managing finances, selling property, paying bills, or authorizing medical care. A general Power of Attorney document specifies a purpose, limiting the agent’s scope of action, and ending the agent’s authority when the transaction or purpose is complete. A Durable Power of Attorney conveys similar authority, which may be very specific or very broad, but remains in effect if the principal becomes incapacitated. To explore this concept, consider the following Durable Power of Attorney definition.
Definition of Durable Power of Attorney
- A legal document designating an agent to act on behalf of the person signing the document (the “principal”), that remains in effect if the principal becomes incapacitated.
1969 Uniform Probate Code (U.P.C. § 5-501)
Role of an Attorney-in-Fact
An attorney-in-fact refers to a person who has been legally designated to act as a fiduciary for the principal, transacting business or signing documents on behalf of someone else. Also referred to as an “agent,” an attorney-in-fact is required to act with complete honesty and loyalty to the principal in all of his dealings. In the event an attorney-in-fact is to be paid for his services, a contract separate from the Power of Attorney should be created.
The role of an attorney-in-fact may be specified in the Power of Attorney document. For example, Max owns property out of state, and executes a Power of Attorney appointing Barbara attorney-in-fact for the transaction. Barbara’s power to act on behalf of Max is limited to acts necessary to selling the property, such as signing a sales contract or transferring the deed.
Fiduciary Duty of an Attorney-in-Fact
When a person accepts the role of an attorney-in-fact to a Power of Attorney, a fiduciary relationship is created. This means the attorney-in-fact has a legal duty to act solely in the principal’s interest, not taking any action by which he might profit without permission of the principal. In any fiduciary relationship, the principal has taken a position of vulnerability, trusting the agent to act on his behalf, and to use good faith and diligence in managing his affairs. Because of this, the fiduciary duty of an attorney-in-fact is held to the strictest standard of care and behavior by the U.S. legal system.
Immediate Durable Power of Attorney vs. Springing Durable Power of Attorney
The terms “immediate” and “springing” as they relate to a Power of Attorney refer to when the duties of the attorney-in-fact take effect. An immediate Durable Power of Attorney takes effect as soon as the principal signs the document. A springing Durable Power of Attorney does not take effect until an event specified in the document occurs. Springing powers are most often used in Powers of Attorney for healthcare, in which the agent’s powers do not take effect until or unless the principal becomes incapacitated. This is called a Springing Durable Power of Attorney for Healthcare (DPAHC).
History of the Durable Power of Attorney
The concept of the Durable Power of Attorney was born of a need to deal with probate issues without tying up each estate in probate court. The 1969 meeting of the National Conference of Commissioners on Uniform State Laws embraced section 5-501 of the Uniform Probate Code, publicizing it to encourage use of the Power of Attorney. A decade later the provisions dealing specifically with the Durable Power of Attorney were modified and published as the Uniform Durable Power of Attorney Act (UDPA), which was updated in 2006. Today, all 50 states recognize the Durable Power of Attorney, though their exact laws and requirements may vary.
Separate Powers of Attorney for Finances and Healthcare
By executing a General Durable Power of Attorney, an individual can give someone they trust the authority to do anything from such routine tasks as opening mail and depositing checks into the bank, to dealing with investments and filing taxes. By executing a Durable Power of Attorney for Healthcare, an individual can give someone they trust authority to make decisions for medical care in the event they cannot make such decisions themselves. This authorization often covers everything from authorizing medications or surgery, to deciding whether to terminate life support.
While it is possible to include all issues of both finances and health care in one document, it is generally considered not to be a good idea. A DPAHC often contains private medical information and personal wishes – information that does not necessarily need to be conveyed to a financial agent. In addition, requiring healthcare professionals to read through information and powers not related to the principal’s healthcare wishes would be burdensome, and may delay their response in honoring the instructions of the designated agent. Creating separate powers of attorney for finances and healthcare keeps everything neat and tidy.
What Can be Delegated by Power of Attorney
Generally speaking, an individual can delegate almost any tasks to an attorney-in-fact, though there are certain powers that cannot be delegated by law. These include making, amending, or revoking a Will, changing beneficiaries to an insurance policy, voting, and entering into a marriage contract. An attorney-in-fact cannot give himself more powers than were granted in the original document. In addition, if the attorney-in-fact is to be compensated, that fact, as well as the amount of compensation, must be specifically stated in a contract signed before the attorney-in-fact takes power.
What is a Living Will
While a Durable Power of Attorney for Healthcare gives an agent the authority to make decisions on an individual’s behalf in the event he cannot express his wishes to healthcare professionals, it does not necessarily state the individual’s desires. A “Living Will” is a document created ahead of time, letting family and healthcare professionals know what the individual would like done, or not done, in the event he becomes incapacitated.
This usually includes such issues as whether the individual wants extraordinary measures taken in a medical emergency, whether he wants to remain on life support, or even whether he wants a feeding tube to be used in the event he becomes comatose. Specifically addressing these important issues ahead of time can reduce the stress and burden on the attorney-in-fact, as well as other family members, in making such decisions.
While it is most common for a Living Will to be created and signed as a separate document, in some jurisdictions it is permissible to include a living will section as part of the DPAHC. This type of combination document is often referred to as an “Advanced Medical Directive.”
Required Language and Standardized Durable Power of Attorney Forms
While a few jurisdictions recognize an oral granting of powers to an agent, most require a Power of Attorney to be in writing, and to be witnessed. Having such an important document witnessed, at the minimum witnessed and stamped by a Notary Public, may help avoid problems in the event the document is ever challenged.
There is certain required language used in each jurisdiction that helps ensure the Power of Attorney is valid and honored. Standardized Durable Power of Attorney forms are available, often provided by hospitals, banks, and other entities for their clients or patients, though an individual may write out his wishes himself if he desires. In fact, an individual should be careful in using a standardized form, as the requirements in language and structure vary from state to state. Additionally, standardized Durable Power of Attorney forms may be used by criminals to fraudulently steal a principal’s assets.
Honoring a Power of Attorney
Because there is some risk of abuse of Power of Attorney forms, many institutions, including banks, may closely scrutinize such documents before allowing an attorney-in-fact to act on behalf of the principal. While the courts consider the specific circumstances of each case brought before them, institutions that make a reasonable attempt to verify the document’s authenticity are generally protected from liability when honoring a Power of Attorney, and the requests of an agent under a POA.
In any state, a POA has no effect unless it is in the possession of the attorney-in-fact. For example, if the agent wishes to open a bank account on the principal’s behalf, or manage financial assets, he must present the original signed POA to the financial institution. On the other hand, most healthcare institutions will accept a photocopy of a DPAHC, and maintain a copy in the principal’s medical file.
Fraud Under Power of Attorney
American philanthropist and writer Brooke Astor entrusted control of her sizeable estate to her son, Anthony Marshall, after she was diagnosed with Alzheimer’s disease. In 2006 a dispute erupted in which Astor’s grandson, Philip Marshall, sought to have his father removed as the woman’s guardian and fiduciary of her estate, amid accusations of elder abuse and fraud under Power of Attorney.
Brooke’s grandson and an employee accused Anthony Marshall of committing fraud under Power of Attorney, allowing his mother to live in squalor, cutting back on doctor’s visits and medication, while using her money to his own benefit. Additionally, accusations arose of Marshall’s diverting about $1 million from his mother’s bank accounts and selling off high-priced artwork with no record as to where the money went.
Marshall was arrested and charged with grand larceny, possession of stolen property, scheming to defraud, forgery, falsifying business records, offering a false instrument for filing, and conspiracy in looting his mother’s estate to the tune of nearly $200 million. Such a blatant breach of fiduciary duty is loathsome to the court, so 85 year old Marshall was convicted in 2009, and sentenced to serve 3 years in prison, and had his inheritance cut from $30 million to $15 million. Because he had Parkinson’s disease, Marshall served only 2 months before being sent home, where he died on December 1, 2014.
Related Legal Terms and Issues
- Incapacitated – to be unable to act or respond
- Fiduciary – a person to whom power, property, or assets have been entrusted for the benefit of another
- Authority – the right or power to make decisions, give orders, or to control something or someone
- Delegate – to appoint a person as a representative or agent, to give power or authority to a person to act as an agent