Power of Attorney – Who Needs It?

This document is for general information purposes only. The production of copies for anything other than free distribution is prohibited.

1. What is a power of attorney? There are two primary types of power of attorney documents. One is the “Advanced Directive” also known as the “Power of Attorney for Health Care”, which allows your agent to make your health care decisions when you can no longer think competently and communicate your wishes. The other type of power of attorney is a General Power of Attorney. It allows the “agent” to make decisions for the “principal” according to the limitations laid out in the document.

2. Who needs power of attorney documents? Anyone who might become sick. Or have a heart attack. Or an auto accident. Or who could fall in their home. In a word, everyone needs to have power of attorney documents. If someone does not have a power of attorney and there is a need for someone else to make their financial decisions they may have to go to court and get a “conservatorship of the estate”. Court proceedings are expensive (upwards of $1,500 plus costs), and unnecessary if some advance planning has been done by signing a properly drafted power of attorney document. Alternatively, someone might also have to go to court to get a “conservatorship of the person” in order to make your health care decisions for you. In addition to the cost there is the stress and uncertainty that goes along with any court proceeding. All of this can be avoided if we act responsibly while we are still competent to do so.

3. What is a principal? The “principal” is the person executing the power of attorney document. Only the principal can decide what powers will be granted in the power of attorney document.

4. What is an agent? An “agent” is the person or institution (it can be a bank, for example), who acts on the principal’s behalf. The “agent” is also referred to as the “attorney-in-fact”. A power of attorney may also designate alternate agents to act if the original agent cannot undertake the responsibilities. Although some attorneys may designate “co-agents” to act concurrently, I generally think this is not a good approach unless there are specific circumstances justifying “co-agency”.

5. What is an Advance Directive/Power of Attorney for Health Care? An “Advance Directive”, or “Power of Attorney for Health Care”, allows the agent to make the health care decisions for the agent. For example, the principal might have given directions regarding the continuation or discontinuation of life support. If the principal has asked that all means necessary be undertaken to continue their life under any circumstances no specific directions are needed in the Power of Attorney for Health Care. However, if the principal wishes to have life support discontinued under any circumstances those directions must be clearly spelled out in the power of attorney document.

In addition to life support the Advance Directive document may also nominate conservators, directions on how to treat the principal in the event of Alzheimer’s, autopsy and donation of organs for the use of other people or scientific research. An Advance Directive may also specify the principal’s wishes regarding burial or cremation.

6. If I want to terminate life support at any time, does my doctor have to follow my agent’s directions? Doctor’s sometimes refuse to follow the agent’s directions to them. You should discuss your Power of Attorney for Health Care with your doctor after you sign it. If your doctor is unwilling to abide by your wishes you should consider finding another doctor.

7. What is a power of attorney? A “Power of Attorney” is one in which the “principal” grants the “agent” specific powers to manage the principal’s financial and legal affairs. These powers of attorney can be durable, which means that they continue to be effective after the principal loses competency. This is when a person needs the power of attorney the most, since they are no longer able to manage their own affairs. Alternatively, they can be non-durable, meaning that once the person becomes incompetent to manage their own affairs the agent can no longer act on the principal’s behalf. Clearly, you should always make sure that any power of attorney you sign is “durable”, unless it is for a specific limited purpose.

8. What is a “springing” power of attorney? A “springing” power of attorney is one that becomes effective only after the principal becomes incompetent to make their own decisions. At that time persons pre-selected by the principal will determine whether the principal has become incompetent. Additionally, if the principal and one other pre-selected person agree that the principal has regained competency, the “springing” power of attorney will “unspring” and become ineffective, ready to be used again if the principal loses competency again.

9. What kinds of powers can be granted in a general durable power of attorney? A power of attorney can be specific to one activity, such as a bank account or selling a house, or encompass a wide variety of activities. Some powers commonly found in power of attorney documents include:

a) allowing the agent to use banking and checking accounts for principal’s benefit;
b) management of the principal’s investments by buying and selling stocks and bonds;
c) collection of money owed to the principal;
d) having access to the materials in the principal’s safety deposit box;
e) having the use of the principal’s credit cards;
f) management of the principal’s real estate, including the buying, selling and mortgaging of property;
g) paying the principal’s taxes;
h) undertaking litigation, as either a plaintiff or defendant, on principal’s behalf and hiring the attorneys necessary to undertake the litigation, and settling litigation, as well;
i) hiring professional persons as necessary to advise the agent on the management of the principal’s affairs; and
j) running the principal’s business.

10. Do I have to record my power of attorney? You cannot record a Durable Power of Attorney for Health Care. After it is signed you should give a copy to your doctor(s) and discuss your wishes with them while you are competent to do so. You should also give copies to your agents.

You can record a General Power of Attorney. As a matter of practice I always record any General Power of Attorney. That way there is not only proof that a notary witnessed the document but further proof that the principal signed it, and the date it was signed, by virtue of the recording of the document.

11. Can I change my power of attorney once I’ve signed it? Powers of attorney are “revocable”. They can be amended or revoked after you have signed them. Make sure to see your attorney when you want to amend or revoke any power of attorney.

12. Can I nominate a conservator in my documents? Yes. You can nominate conservators in your Durable Power of Attorney and General Power of Attorney documents.

13. Can my agent use copies of my documents? Whether the agent can use copies or not depends on whether the document itself allows for the use of copies. You should give copies of your Power of Attorney for Health Care to each of the persons you designate as an agent. You should also give copies to each of your health care providers.

You do not need to give copies of the General Durable Power of Attorney to your agent but you do need to let the agent know where the documents are kept. Make sure the agent will have access to the documents; don’t lock them in a safe unless the agent has the key or combination.

14. Do I need a “living will”? A “living will” is a document that instructs your health care providers not to resucitate you or provide you with life support if you are in a coma or persistent vegetative state. There is no need to appoint an agent in a living will, it is a direct statement of your wishes to your doctor or health care provider. Due to a change in law, these wishes can be addressed in your Advance Directive.

15. Are power of attorney documents part of estate planning? Every person should have power of attorney documents as part of their estate planning. This allows the person to control their medical decisions through their agents. It also allows the person to designate who will handle their legal and financial affairs. Because the documents are executed before they are needed, they prevent the need for a conservatorship proceeding. Of course, to be complete every estate plan should have not only the power of attorney documents but also a trust or will to go along with them.

16. Who should draft my power of attorney documents? There are form documents for both the Advance Directive (“Power of Attorney for Health Care”), and General Durable Power of Attorney documents. Both have blank lines on the forms in which you can give specific powers or directions. But unless you complete the form with an experienced person you will be unaware of the additional information you should write in the blanks.

Unfortunately, while the Power of Attorney for Health Care is adequate in most respects the Durable Power of Attorney used by most paralegals and many attorneys (which is itself a copy of the form which appears in California law and which is referred to as the “statutory power of attorney”), is inadequate in several ways when used for elderly people. The fact that it refers to powers only generally may prevent an agency or person from honoring the power since it is not “specific” enough. Nor does it allow the agent to care for the principal’s pets. Handling of retirement benefits and IRAs may also pose a problem. And if you have special circumstances the “Statutory” General Power of Attorney may turn out to be woefully inadequate when you are powerless to change it. Finally, the statutory power of attorney is always immediate; it does not allow you to choose a springing power of attorney. In my own practice I almost always use a Springing Durable Power of Attorney for my clients unless there is an immediate need for the agent to have the powers of attorney. For these reasons and more you are best advised to have an attorney who practices in the area of elderlaw draft your power of attorney documents.

17. Final note. In June of 1998, I met with a man at the Bernardi Senior Center in Van Nuys who wanted to refinance his joint tenancy home but couldn’t because his wife was mentally incapacitated and could not sign the papers. However, he could not afford to pay for a conservatorship. Therefore, he was unable to refinance the property to obtain a lower monthly payment. Had this man’s wife done some advance planning and executed the proper power of attorney documents the husband would have been able to refinance the property.

In August of 1999 I met with a client at a senior center in Van Nuys. The client had prepared her own health care power of attorney, sent to her by AARP, while she was living in Pennsylvania. Unfortunately, the document had not been properly signed and was therefore without any legal effect. Had she not seen me, she would never have updated her documents to make them legally effective and would not have a Durable Power of Attorney for Health Care.

Be smart. Have your power of attorney and estate planning documents prepared for you by an attorney who practices primarily in the area of Elder Law or Estate Planning.