Powers of Attorney

By Katie Martens

Abstract: the different types of powers of attorney documents you could have, and how the powers of attorney fit within the scope of your entire estate plan.

I attended an education seminar in which a probate judge declared to the entire conference room of attorneys that if she could, she’d tell every single person in the state to get a power of attorney. Having seen countless families and individuals come through her probate court without one, and seeing the unnecessary expenses, costs, and procedural hoops to jump through, this probate court came to believe the simple power of attorney documents could have saved these people a lot of headache and heartache.

This article will discuss what a power of attorney document is, how it fits in with your estate plan, and things to keep in mind when preparing your own powers of attorney.

What is a Power of Attorney?

“Power of attorney” is a clunky way of saying you have a document designating someone else who can make decisions for you in case you’re incapacitated. Here is the vocabulary that will help you converse easier with your attorney in drafting these documents:

  • Durable Power of Attorney = usually the “business” or “financial” version of the Power of Attorney, or thought of another way, as the directives that affect everything BUT healthcare. Lawyers often use scary stories of what happens when people don’t have a power of attorney because they’re powerful examples of exactly how wrong things can go without a simple document.

For example, a husband and wife ran a business together, and while the husband was unloading a delivery truck, he slipped and fell off the delivery truck, hitting his head on the edge of the concrete ledge where he was unloading. Despite their marriage, and probably having a few joint accounts together, the wife had to go through probate court to get a conservatorship for the husband because he didn’t have a power of attorney giving the wife the authority to act for him. She likely spent thousands of dollars in legal fees and court costs to get that authorization that a simple Power of Attorney could have solved, likely for the cost of a hundred or two dollars.

  • Principal = the person making the power of attorney

  • Agent = the person you designate to step into your shoes and take care of your obligations while you’re incapacitated

  • Contingent/Second Agent = this is the backup person you designate in case your first choice isn’t available

  • Attorney-in-fact = the agent, the person you designated to make decisions for you

  • Powers = often you can check off specific powers you want to give your agent, or give very broad powers to do whatever they need to do to take care of your legal, financial, or living situations.

  • Healthcare Power of Attorney = this is the document you use to designate someone to make healthcare decisions for you. If you are undergoing a surgery at a medical facility, the facility will likely have you sign one of their own HCPOAs before you go under the knife. If you already have one of your own, the medical facility will ask for a copy of it. There are a few terms exclusive to the Healthcare Power of Attorney that will help you understand this document:

    • “Persistent Vegetative State/Condition” = usually this term, or a variation of it, is used to describe WHEN the agent can begin making healthcare decisions for you. You can define this term as thoroughly as you want, for example, you can state in the document that a persistent vegetative state must be verified in writing by 2 separate physicians, and you must be in that state for a 24 hour period. Or, you can leave the term to be defined by your doctor.

    • “Living Will” = this is usually a separate section within the HCPOA, or it can be its own document. Either way, I usually explain this section to clients as the “do or do not pull the plug” directive. If you are determined to be in a “persistent vegetative state,” how long do you want your agent and doctors to wait until they stop providing nutrition to keep you alive? This section is meant to answer that question for those taking care of you after you’re hit by that bus and nonresponsive for days in the hospital.

How a Power of Attorney Fits in with Your Estate Plan

If you consult with a lawyer to discuss your will, you should also be discussing powers of attorney documents with the same lawyer. In the grand scheme of estate planning, most attorneys are thinking of 4 main categories: (1) wills, (2) powers of attorney, (3) trusts, and (4) ways to avoid probate (if that’s a goal of the client).

Keep in mind that wills are for after you die, but the powers of attorney are only for when you’re incapacitated. If your granny named you as her power of attorney, and then she dies, it doesn’t matter anymore that you were her agent in the power of attorney. Now that she’s dead, attorneys, bankers, funeral directors, probate courts and anyone else who may be involved in processing her estate, will not care that you have her power of attorney. They will now be looking at her will to determine who was named the Personal Representative, or sometimes called the Executor. Different people can be named in the power of attorney and in the will.

Things to Keep in Mind

  • Powers of attorney documents are usually short, between 1-3 pages, so it shouldn’t take you long to review and sign one.

  • State supreme courts often provide forms for the public to use as powers of attorney documents, which you can download and fill in.

  • If the thought of finding and contacting an attorney to do your estate plan seems like a lot of work, start with the powers of attorney. That way, you can get something in case something knocks you out tomorrow, and gives you an idea of whether you’d like to continue working with that attorney.

  • You can always revoke the power of attorney. Sibling pissed you off, so now you don’t want them handling your bank accounts while you’re in a coma? Totally fine, do it in writing and do it before you’re in the coma.

  • Powers of attorney can be limited in time. For example, members of the military can sign limited powers of attorney for friends or spouses while they’re deployed. The power of attorney would expire once the military member returned from his or her deployment.

  • Powers of attorney are drafted with the intent that they last forever. No one should have to revise or edit their power of attorney every year, unless there have been drastic changes in circumstances, such as the death of a child who was named as agent.

  • Choose someone TRUSTWORTHY and RESPONSIBLE. I can’t stress this enough, which is why I left it for last. If you wouldn’t trust them to watch your dog while on vacation, you probably shouldn’t trust them to manage your finances or healthcare choices while you’re unable to make your own decisions. Once you pick someone, make sure to COMMUNICATE with them so that they know what you want, and provide them copies of the signed documents.