A power of attorney is a document where a person names another person to act as their agent in certain circumstances described in the text of the power of attorney. The agent can then act on behalf of the person who signed the power of attorney, known as the principal, without needing any further input from the principal.

One important distinction between types of powers of attorney is whether or not the power of attorney is durable.

A durable power of attorney can remain in effect after a person becomes mentally incapacitated. A durable power of attorney is a valuable planning tool that can allow for an agent to protect the interests of an incapacitated person when the incapacitated person is unable to act.

Separate durable powers of attorney may be drafted for different decisions. One common distinction is between health care and financial decisions. A health care durable power of attorney allows someone to make decisions such as whether or not to continue treatment or what types of treatment a person should receive. A financial durable power of attorney allows someone to make financial planning decisions on behalf of the principal. These decisions often involve transactions that are needed to minimize tax burdens or to qualify a person for government benefits.

A nondurable power of attorney can also grant an agent power to make various decisions, but nondurable powers of attorney become invalid when the principle becomes incapacitated. Becoming invalid upon incapacity makes nondurable powers of attorney useless for the planning purposes that make durable powers of attorney useful. Nondurable powers of attorney are used when the principal is unable to act due to time, travel, or other constraints, but is otherwise mentally competent. Typical uses include finalizing previously discussed financial transactions.

Both durable and nondurable powers of attorney can be revoked by a mentally competent principal at any time.

Because of the authority granted in a power of attorney, powers of attorney should be drafted only by an experienced attorney with a specific client’s needs in mind. The client and attorney should discuss what the power of attorney should entail and carefully tailor the document to only give the powers that are necessary and to specify when those powers are effective. Similarly, any revocation of a power of attorney should also be drafted by an attorney to make sure that it is legally effective.

Powers of attorney are governed by state law and therefore vary from state to state. People should work with an attorney in their state to make sure their documents are valid for the purposes intended and create new documents, if necessary.

To review your power of attorney circumstances and to develop a plan for a potential incapacity, please call Martha C. Brown & Associates at (314) 962-0186.