Orlando Estate Planning Attorney: Power of Attorney
As an estate planning attorney in Orlando, the following questions often comes up:
What is a Power of Attorney and How Does it Work?
Whether you’re in Orlando, Florida or elsewhere, a power of attorney (POA) is a written document that authorizes someone to represent or act on another’s behalf in personal, business or legal matters.
The person who authorizes the POA is called the principal, grantor, or donor. The person authorized to carry out the principal’s affairs is called the agent or, in some jurisdictions, the attorney-in-fact. The agent can be the principal’s spouse, adult child, relative, or friend. There are several different types of POAs, used for various purposes, but all of them have the power of law, and the actions of an agent are legally considered to be those of the principal. Therefore, it is incumbent upon the principal to choose an agent who is completely trustworthy.
Each state has different statutes regarding POAs. For example, some states allow oral POAs. However, in most jurisdictions, the POA document must be signed and dated by the principal. In some states it must also be notarized and in others it must be signed by both the principal and the agent. Some states require that it also be signed by at least one witness. If you are contemplating drafting a POA, you should determine what laws regulate the procedure in your state.
The two main types of POAs are general and special. A general power of attorney allows the agent to handle most of the principal’s personal and business matters. These may include anything from opening mail, to signing papers and contracts, to depositing checks, to overseeing investments, to making gifts of money. A special power of attorney is one that is limited to a specified issue, or type of act, or particular time frame. Examples may include selling a specific piece of real estate, or handling an important contract because the principal is out of the country. Or the special POA may include language that it expire on a date certain.
Traditional Vs. Durable Power of Attorney
Traditional (Non-Durable) Power of Attorney
Ordinarily, a traditional, or non-durable, power of attorney can be created only if the principal has the requisite mental capacity. It automatically ends if the person who makes it loses that capacity due to accident or illness, or if it is revoked, which a principal can do at any time.
Durable Power of Attorney
In contrast, a durable power of attorney continues the principal/agent relationship beyond the principal’s incapacity or incompetence. (Both traditional and durable POAs end with the death of the principal.) A durable POA can be either general or special. There are two types of durable POAs: immediate and springing. The first type takes effect as soon as the POA document is executed. The second “springs” into effect as the result of a specific event, such as the principal’s inability to carry on his or her affairs.
The concept of the durable POA is relatively recent. It was created in 1969, as part of the Uniform Probate Code (UPC), which is now recognized in part or whole by most states. In 1979, the provisions of the UPC that dealt with durable POAs were published as the Uniform Durable Power of Attorney Act. (UDPA). Durable powers of attorney are beneficial because they enable principals to have their affairs handled expeditiously and inexpensively after they have become incapacitated, or otherwise unable to handle them, themselves. Before the durable power of attorney was created, the only way to handle the affairs of an incapacitated person was for a court to appoint a guardian, a process that frequently involved complex and costly court proceedings, as well as the need for proving that the principal was indeed incapable of making competent decisions.
Financial and Medical POAs
Financial Power of Attorney
A financial power of attorney gives someone the authority to handle financial matters on another’s behalf. As stated, it can be general, giving the agent authority to manage all of the principal’s financial affairs, or it could be special, giving the agent the authority to handle only a specific transaction, such as closing a real estate deal. The agent does not have to be a financial expert, but it is important that the principal chooses someone who is honest, competent, and dependable, and will act in the principal’s best interests at all times.
Medical Power of Attorney
A medical power of attorney gives the agent the authority to make healthcare decisions for the principal, including the ability to consent to giving, withholding or terminating medical treatments and procedures when the principal is no longer able to make those decisions for him or herself, due to illness or injury. In some jurisdictions this type of durable POA is called a “healthcare proxy.” When arranging healthcare, the agent is legally bound to follow the preferences stipulated in the POA document. A medical POA is often accompanied by a second type of health care directive – sometimes called a “living will” – which provides written instructions to healthcare providers. Some states combine a durable power of attorney for health care and a living will into a single form, commonly called an “advance health care directive.”
Voiding a Power of Attorney
A power of attorney can be voided in several ways. It can simply be destroyed by the principal; it can contain within it a termination procedure; it can be revoked by creating another document that is signed and notarized by the principal and sent to the agent or filed with the appropriate jurisdictional office; or it can become non-operable if the agent dies or is otherwise unavailable and an alternate agent has not been named. In some states, a POA which lists a spouse as agent becomes void if the parties divorce. In addition, all POAs automatically terminate upon the death of the principal.
Drafting a Power of Attorney in Orlando
Today, standardized power of attorney forms are available for various kinds of powers of attorney and can easily be accessed online. However, since there is considerable variation in approved formats among the states, if you are contemplating drafting a power of attorney, you should consult an experienced and knowledgeable Orlando estate planning attorney to make sure that your document is valid in the jurisdiction in which you live. Contact us we stand ready to assist you in this and all other pertinent legal matters.