Understanding the Power in a Power of Attorney

A Power of Attorney, or POA, is among the most common estate planning tools. Most people, at some point in their life, either create a POA or act as an Agent under a POA created by someone else. Unfortunately, a Power of Attorney is also one of the most frequently abused legal documents. One reason for that is that all too often the person creating the POA does not truly understand the power and authority conveyed in the document. With that in mind, the Riverside elder lawyers at Dennis M. Sandoval, A Professional Law Corporation want to make sure that you understand the power in a Power of Attorney before you execute one.

What Is a Power of Attorney?

At its most basic, a Power of Attorney is a legal document that allows you (referred to as the “Principal”) to grant another person (the “Agent”) the authority to act on your behalf in legal matters and transactions.  The type and extent of the legal authority you grant to an Agent depends on the type of POA you create.

General vs. Limited Power of Attorney

When creating an executing a Power of Attorney the first choice to make is whether you need a general or limited POA. A general POA grants your Agent almost unfettered power to act on your behalf in legal matters. Consequently, your Agent may be able to do things such as withdraw funds from your financial accounts, sell or encumber property and assets owned by you, and even enter into contracts in your name.  Although the law places some limits on the actions of an Agent with a general POA, you should never give someone a general POA if you have any doubt about their trustworthiness.

On the other hand, a limited POA only grants to your Agent the limited, and specific, authority enumerated in the POA. For example, you might grant an Agent the limited power of attorney to represent you at the closing on the new home you purchased because you will be out of the country at the time.  Parents with minor children also frequently use a limited POA to grant a caregiver the authority to consent to medical care for their children in the event it is needed should an emergency arise.

Durable Power of Attorney

You also need to know the distinction between a traditional and a durable Power of Attorney. Historically, the authority granted to an Agent in a POA automatically terminated upon the death or incapacity of the Principal. As you may well imagine, however, the possibility of becoming incapacitated is a common motivation for executing a POA.  In other words, many people create a POA specifically to ensure that their Agent named in the POA has the authority to act on their behalf if they suffer a period of incapacity. That doesn’t work, however, if the POA terminates upon the incapacity of the Principal. To resolve this problem, the concept of a “durable” POA evolved. When a POA is made durable it simply means that the Agent’s authority survives the incapacity of the Principal.

Springing Power of Attorney

Yet another type of Power of Attorney is a Springing POA. Both a general and a limited POA can be a Springing POA. A Springing POA has special language in it that causes the Agent’s authority to “spring” into action at a specific time or upon the occurrence of a specific event. For example, you might create a general POA that does not actually go into effect unless you have been missing for more than 48 hours or until you have been declared incapacitated by a physician.

California Advance Health Care Directive

In most states, one of the most important limitations on a general POA is an Agent’s ability to make health care decisions for the Principal. This limitation applies even if the POA is durable or activates only upon the incapacity of the Principal. Therefore, if you wish to give someone the authority to make health care decisions for you in the State of California, you will need to execute a separate document known as a “California Advance Health Care Directive.” The California Advance Health Care Directive is one of several types of advanced directives recognized within the state. The Advance Health Care Directive lets you appoint an Agent to make health care decisions for you if your primary doctor determines that you lack the ability to understand the nature and consequences of your health care decisions or the ability to make and communicate your health care decisions yourself.

Contact California Elder Law Attorneys

If you have additional questions or concerns about elder law, executing a Power of Attorney, or use of an Advance Health Care Directive, contact the experienced California elder law attorneys at Dennis M. Sandoval, A Professional Law Corporation by calling (951) 888-1460 to schedule an appointment.

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Dennis Sandoval

Dennis Sandoval is the only attorney in California who has certifications in the three areas of estate planning, elder law and taxation. In 2014, the National Academy of Elder Law Attorneys (NAELA) designated Dennis as a Fellow, an award given to less than 100 elder law attorneys across the United States. He received his Certified Estate Planning, Trust and Probate Law Specialist designation from the California Bar Board of Legal Specialization in 1998 and his Certified Taxation Law Specialist designation in 2000 from the same organization. He is a Certified Elder Law Attorney (CELA), a designation he proudly received in 2004 after meeting all the requirements established by the National Elder Law Foundation (NELF) and the American Bar Association. Dennis has also holds the designation as an Accredited Estate Planner® (AEP) from the National Association of Estate Planners and Councils.

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