A question I sometimes get is, “What is a power of attorney?” A power of attorney is a document that allows somebody to act as your agent, in your place. Think of it as somebody basically taking a wooden stick with a picture of your face on it and putting it in front of somebody else and acting as if they were you. There are two main types of power of attorneys. There is a the general and the limited power of attorneys. The limited power of attorneys are limited to specific events or specific time frames.
For example, if you were closing on a house and the other person that was buying it with you or selling it with you couldn’t appear at the closing, you could provide a power of attorney to the person that could be there, giving them the ability to sign on your behalf so you don’t have to show up. I’ve had this happen with husbands and wives, the husband or wife, either one, one of them can’t show up, they give a limited power of attorney for a short duration or a certain thing, which is transferring the real estate, and then the spouse signs power of attorney for the person that can’t appear.
The other power of attorney is the general, which doesn’t have a specific time frame limit on it. It’s just a general power of attorney. When I write my general power of attorneys, they typically allow somebody to do all the banking, general financial affairs, and personal day to day things of the person giving it, including; retirement contributions, managing investments, paying taxes, completing and filing returns, paying the cable bill, and checking bank balances. Everything for that person, using just their assets that are in their name alone.
There are two types, kind of sub-types that refer to the strength of the power of attorney; durable and non-durable. Durable power of attorneys don’t care if you become incapacitated or you lose the capacity to give a power of attorney. To give the power to act as you to somebody else, you have to have capacity, you have to be in your right mind, you have to know what you’re doing, and you can’t be under duress. You have to be making the decision yourself, for your own reasons. Durable means once you have the capacity and you give the power of attorney to somebody and they have it, if you later become incapacitated, you go crazy, you go into a coma, anything like that, the durable power of attorney does not care that you’re now incapacitated. It can last longer than your incapacitation, which generally is what you want. You want someone to be able to take over things when you’re incapacitated.
A non-durable power of attorney is only in effect for the time when you have the capacity to give it. So for example, if you give power of attorney to somebody and then all of a sudden you get into a car accident, you have head injuries, you have brain swelling, the doctors decide, “We’re going to put you in a coma for a couple weeks to let the brain swelling go down,” now you’re incapacitated. That non-durable power of attorney is of no use. It is now ineffective.
When is the power of attorney effective? That’s also a good question. Most people don’t want to give the power of attorney to somebody and just let them have free reign over their life while they’re alive and they can still make their own decisions, they only want it given when they’re incapacitated. If you’re dead you can’t give power of attorney. But if you have capacity, most people want to control everything themselves. There are two times when power of attorney can become effective. Either you write it so it immediately becomes effective, or you write it so it’s a springing power of attorney, kind of like a superhero. A superhero steps in when there’s an emergency, solves the emergency, and then disappears again, like Superman or Batman. Superman sees an emergency, gets in the phone booth, changes, solves the emergency, leaves, goes back to Clark Kent.
The springing power of attorney is typically predicated on something happening, typically it’s incapacity. You provide a power of attorney to your wife or your friend or whomever, and then when you become incapacitated it springs into action and they can now do things on your behalf for you that you outline in the document. The moment you get that capacity back, the power of attorney dissolves and goes away because you have capacity again. And when you get that capacity back, they have to give you an accounting of everything they did while you were incapacitated. They have to give you a list of everywhere that they gave the power of attorney to, so you can go revoke it and revoke their access. Because until you revoke it, the bank, financial institution, cable company, will just assume that power of attorney is still in effect.
I’ve outlined a couple times when this would be needed, and that’s mainly when you’re incapacitated or when you simply can’t show up to something and you want somebody else to have the ability to appear for you. Typically, as part of estate planning you would get the power of attorneys for financial affairs and daily day to day stuff, and the healthcare power of attorney. The healthcare power of attorney typically have living wills and advance directives integrated within the document. It makes it a little bit more effective.
When you’re incapacitated and you can’t make medical decisions for yourself, you name your friend or some trusted person, be it your spouse or whomever, as your healthcare power of attorney or healthcare proxy. In your time of incapacitation, they are now your agent and can help the doctors make healthcare decisions on your behalf. But part of that power of attorney is an advance directive and living will that basically outlines what you want done. And the agent is supposed to follow the directions in the document.
In a future post, I will get a little bit more in depth on the healthcare power of attorney because there are a lot of moving parts to it, despite how simple it sounds. But if you know anybody that wants to know more about power of attorneys or you’re concerned they do not have one, share this with them. If you think you need a power of attorney and you want me to help, feel free to reach out to me or schedule a strategy session below.
William C. Deveneau is an attorney practicing in Southern Vermont, including Bennington and Manchester, and New York, including Albany, Colonie, Hoosick Falls, and Troy.