Power of Attorney

What does Power of Attorney Mean?

A power of attorney is the grant of legal rights by a person (the "principal") to another (the "agent" or "attorney-in-fact"). The attorney-in-fact, in effect, stands in the shoes of the principal and acts for him or her on financial and business matters. Sometimes, the principal may want the Power of Attorney to address long term care decisions, which relate to medical issues. Powers of Attorney may contain very broad language to encompass all actions that the principal could do, or they may be narrow and limited to a specific purpose or purposes. However, the attorney-in-fact is always limited because the use the principal's finances must be solely for the principal's benefit.

Unless the power of attorney is "springing", it takes effect as soon as it is signed. A "springing" power of attorney takes effect only when the event described in the instrument itself takes place. Typically, this is the incapacity of the principal as certified by one or more physicians. Although effective upon execution, the principal may await a certain age or physical incapacity before he delivers the actual power of attorney document. Upon the death of the principal or a court declaration of his incapacity, however, a power of attorney ends automatically.

An attorney-in-fact simply has the power to act along with the principal. A principal may revoke a power of attorney at any time. All a principal needs to do is send a letter to his or her attorney-in-fact telling them that their appointment has been revoked. From the moment the attorney-in-fact receives the letter, he or she can no longer act under the power of attorney.

The attorney-in-fact has a fiduciary responsibility to the principal. As a result, it is very important that the attorney-in-fact keep accurate records of his or her actions under the power of attorney so he or she may answer any questions anyone (including the principal) may later raise. The most important rule for the attorney-in-fact is not to "commingle" or mix the principal's funds with his or her own money. Keep the accounts separate. The easiest way to keep records is to place the funds in a checking account. The checks will act as receipts and the checkbook register as a running account.

Anyone considering a power of attorney for themselves or family members should contact an attorney who is skilled in this area. The lawyers at Hunziker, Jones & Sweeney have the skills and experience to help you in these matters, and welcome your inquiries.

For more information, contact us at info@hjslawoffice.com