A power of attorney is one of the most commonly used estate planning documents. Most people execute at least one power of attorney, or POA, at some point during their lifetime. In fact, a POA is such a commonly used legal document that most people do not stop to think about the power behind a POA. If you have been asked to sign a POA, or you are contemplating creating one, you need to first make sure you understand what you are signing. Understanding the power in a California power of attorney is crucial before executing one because you could unwittingly grant someone more power than you intended.
What Is a Power of Attorney?
At its most basic, a power of attorney, or POA, is a legal agreement that allows a “Principal” (the person granting the power) to grant an “Agent” (the person being granted the power) the authority to act on behalf of the Principal in legal matter. In essence, an Agent stands in the Principal’s shoes when exercising his/her authority under the terms of the POA. The type and extent of the authority an Agent has under a POA depends on the type of POA executed by the Principal.
General Power of Attorney
There are two broad categories of power of attorney – a general POA or a limited/special POA. A general POA grants almost unlimited power to the Agent. An Agent who has your general POA can do things such as withdraw funds from your bank account, sell your property, and enter into contracts in your name. Under a traditional POA, the Agent’s authority under a general POA continues until the Principal revokes the authority, dies, or becomes incapacitated.
Limited or Special Power of Attorney
A limited, or special, power of attorney only grants the Agent the specific authority enumerated in the POA agreement. You might, for example, give your brother the authority to sell your vehicle for you while you are out of the country. A special POA can also include a time frame during which the Agent’s authority is active and/or include a specific termination date. Like a general POA, a special POA will also continue until the Principal revokes the authority, dies, or becomes incapacitated if no specific time frame or termination date is included in the document.
Durable Power of Attorney
Traditionally, the power conferred upon an Agent under a power of attorney agreement would end upon the death or incapacity of the Principal. The problem with this was that many people executed a POA with the specific intent to give someone the authority to act on their behalf in the event of their incapacity. Under a traditional POA, however, the document would terminate precisely when the Principal intended it to be useful. To remedy this problem, the “durable” power of attorney evolved. When a POA is “durable” it means that the Agent’s authority will survive the incapacity of the Principal. In some states, a POA is now assumed to be durable absent language to the contrary whereas in other states the converse is true – a POA is presumed not to be durable unless the document includes specific language making it durable. Be sure you know what the law stands in the state where you plan to execute your POA. Because you cannot be sure how a POA will be viewed in any specific state, it is always wise to clarify whether or not you intend the POA to be durable or not.
Springing Power of Attorney
One last type of POA is referred to as a “springing” POA because the powers granted to the Agent “spring” up upon the occurrence of a specific event. For example, you might grant a POA to someone but the authority you grant will only become active upon your incapacity.
Never sign a power of attorney without first asking an experienced estate planning attorney to review the document to ensure that it only grants the power you intend for it to grant to the Agent.
Contact Us
For more information, please join us for one of our upcoming free seminars. If you have additional questions or concerns about conservatorship in the State of California, contact the Collins Law Firm by calling (310) 677-9787 0r Click Here reserve for a Free Estate Planning Workshop.
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