Powers of Attorney
The Power of Attorney is a document which should be prepared and explained by a qualified attorney. It is the first and probably the most important step in almost every estate or elder plan. Your Power of Attorney will allow you, the “principal,” to grant legal authority – sometimes very broad and sweeping authority – to another individual, called your “agent,” who can then sign your name to various legal and financial documents. These documents will be treated as though you signed them yourself. Because this document is so powerful, you should only appoint as your agent someone in whom you have absolute trust.
Your Power of Attorney may also restrict the scope of your agent’s authority. Sometimes it is to specific matters, such as paying routine bills, and other times it is to a specific timeframe, such as while you are away on vacation or recovering from a medical procedure. The new Power of Attorney form allows the principal to put his or her initials in various boxes on the form to indicate exactly what authority he or she wishes to grant the agent and allows flexibility to restrict the authority to a specific time.
There are generally two types of Powers of Attorney. The first type is a Durable Power of Attorney, which is valid immediately upon signing and survives any future disability. If you are not capable of handling your own affairs, the Power of Attorney would continue to be valid and your agent would be able to tend to your affairs in spite of your continuing disability. It is very important for a Power of Attorney to be durable. Most people really only need it if they suffer from some illness or disability that makes it necessary for another to use the document to transact their business.
New York Law also authorizes the use of what are called Springing Powers of Attorney. This Power of Attorney becomes effective only upon the certification by one or two physicians that the Principal is unable to handle his or her own affairs due to the disability. This certification must be attached to the document any time the Power of Attorney used for any transaction or is filed in the County Clerk’s Office.
You may allow more than one person to act as your agent under a Power of Attorney. You can allow them to exercise their authority independent of one another or require that they must sign together to exercise their powers on all transactions.
A durable Power of Attorney is a very useful document and should be a part of any estate plan. If a person does not have a valid Power of Attorney and becomes incapacitated for any reason, a spouse or family member must commence a guardianship proceeding, which can be a lengthy, expensive and heart-wrenching proceeding in which the courts determine who will be placed in charge of handling the person’s medical, legal and financial affairs. Because this result is so easily avoided by having a well-drafted Power of Attorney in place, we include this document in the estate plan of every competent adult. Naturally, each of us hopes that we will always be in a position to handle our own affairs; however, when unanticipated events make handling one’s own legal and financial matters impossible, a Power of Attorney is an invaluable help.
To ensure that your Power of Attorney is prepared properly, you should consult with a qualified Elder Law or Estate Planning Attorney. The document can then be deposited with your attorney for safekeeping to be produced only when necessary. A Power of Attorney should not be put in your safe deposit box, since your agent would not be able to gain access to the box without it and therefore the document would be useless. To consult with an attorney who practices in Elder Law or Estate Planning regarding the right type of Power of Attorney and Estate Plan for you, contact the law firm Piede Sun LLP.