Seniors: Not All Powers of Of Attorney Are The Same

My friends and I were recently discussing powers of attorney. It seems that we have different understandings as to what they look like and how they can be used. Can you provide me with a short lesson which I can share with them?

By Gene L. Osofsky, Esq. SPECIAL TO THE FORUM

Sure. Powers of attorney are very important legal documents. In their basic structure you (the principal) delegate to someone whom you trust (your agent or “attorney-in-fact”) the power to engage in financial transactions in your name, using your assets, with the same legal effect as if you had signed the transaction documents yourself. But all powers of attorney (“POA”) are not the same. Here is a short list of some variations:

1. Is It Durable? Unless the document expressly so provides, a POA expires when the principal loses mental capacity. However, this feature may be overcome if the document provides that it is “durable,” meaning that it survives the principal’s incapacity. In almost every case, you will want a power of attorney to recite that it is durable, as that is usually when it is needed most.

2. Is It a “Springing” Power? A POA can either be immediately effective or it can be effective only upon the occurrence of a future event, such as incapacity. If triggered by a future event, we refer to this as a “springing power,” because it only springs into life upon the occurrence of that future event. Example: Many POA’s are designed to spring into life only when a physician certifies that the principal has lost mental capacity.

3. Is It Limited Or General? A POA can either be limited in scope (e.g. authorizing an agent to sign a deed and other documents to close a specific sale escrow) or be limited in time with a fixed expiration date, or it can be very general and comprehensive in nature.

4. Does It Permit Creation or Modification of Trust? If you have complete confidence in your agent, you may wish to authorize your agent to create a Trust, and/or make future