Power of Attorney -What is it?

When dealing with situations of health or end-of-life care, you may have run across the term “Power of Attorney.” Like a lot of legal jargon, it can be difficult to fully comprehend what that actually is or what it means. If you’re confused by this term, then this article is for you. Hopefully by the end of it, you’ll have a better grasp on the concept of a power of attorney and what it can mean for you and your loved ones.

In the simplest of terms, power of attorney is granted to an agent—that is, someone who handles decisions and affairs on behalf of an incapacitated individual (called the “principal”). The laws for creating a power of attorney do vary from state to state, though there are certain guidelines you’ll need to follow in doing so. Before you or a loved one goes signing papers, however, please be sure to get the advice of an attorney concerning any and all applicable laws or regulations.

The principal can determine the amount of power that the attorney-in-fact receives. The attorney-in-fact can be given the authority to deal with just one particular issue (a specific power of attorney), or to handle most any and all of the principal’s personal and financial matters (a general power of attorney). No matter the type the principal chooses, the attorney-in-fact is responsible for keeping accurate records of any and all transactions that he or she might make on behalf of the principal. He or she is also responsible for distinguishing between types of decisions that he or she has the power to make, as well as other decisions too.

There are a lot of decisions an attorney-in-fact can make, but some of them are:

  • Making financial decisions
  • Making gifts of money
  • Make health care decisions, like the ability to consent to giving, withholding, or stopping medical treatments, services, or diagnostic procedures (Your loved one may also make a separate “health care power of attorney” to give this power to a person.)
  • Recommend a guardian

In most cases, the attorney-in-fact is paid, which means that the principal does need to decide on a set amount of compensation or the method for determining an appropriate pay scale. If they don’t determine the amount in the document, the courts will set the amount. The court cannot, however, raise the amount above a fixed percentage of the value of the principal’s property.

It should also be known that not having a power of attorney at all is better than making one and having someone the principal doesn’t trust be in charge of it. Regardless, the principal should let another person they do trust—other than the attorney-in-fact—know where the original document and copies are, and who the attorney-in-fact actually is. It’s important to choose the right person for the job, make clear, concise documentation of power of attorney, and understand the ways in which the document can be challenged or terminated. Life is full of unexpected accidents and happenings, and it’s best to come at these situations as prepared as you can be.

This is just a small taste of power of attorney, enough to give you a better idea of who the person is and what they have the ability to do. For any other questions you might have, it would be appropriate to seek legal counsel.