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A Power of Attorney (POA) is a legal document that allows you (the “Principal”) to grant another person (the “Agent”) the authority to act on your behalf in legal matters and transactions. The extent of the authority granted to an Agent in a POA depends on the type of Power of Attorney executed by the Principal.
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There are two basic types of Powers of Attorney, general and limited. A general POA grants your Agent almost unlimited power to act on your behalf. This means that your Agent may be able to do things such as withdraw funds from your financial accounts, sell property and assets owned by you, and even enter into contracts in your name. If you choose to give someone the authority granted in a general POA, you should assume that your Agent will have virtually unfettered control over your assets. Knowing that, you should exercise extreme caution when executing a general Power of Attorney and choose your Agent with care.
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The other type of POA is a “limited” POA which only grants to your Agent the limited, and specific, authority outlined in the POA. For example, you might grant an Agent the specific authority to sell your vehicle for you while you are out of the country for a month. Parents with young children also frequently make use of a limited POA to grant a caregiver the authority to consent to medical care for a child should an emergency arise while the parents are away.
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The concept of a durable Power of Attorney evolved because of a need to address a problem with traditional POAs. The authority granted to an Agent in any POA automatically terminates upon the death or incapacity of the Principal in a traditional POA. The problem with that is that the possibility of becoming incapacitated was often the primary motivation for executing a POA in the first place. If your goal in creating the Power of Attorney is to ensure that the person you name as your Agent has the authority to act on your behalf if you suffer a period of incapacity, but that authority automatically terminates when you become incapacitated, the POA is effectively worthless. The problem gave rise to the “durable” POA. Making a POA durable allows an Agent’s authority to survive a Principal’s incapacity.
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Either a general or 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 springing POA that is triggered by a declaration of incapacity made by a physician or if you have been out of communication for a specific amount of time. If the event occurs, your Agent’s authority “springs” into action. If the event never transpires, the Agent’s authority is never activated.
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The authority granted in a Power of Attorney is well established by law; however, it is not uncommon for a third party to refuse to recognize that authority. A common reason for refusing to honor an Agent’s authority is claiming that the POA was executed too long ago. A third party may also question the authenticity of the document or refuse to honor a POA unless it is created using their form. These are not valid legal reasons to refuse to honor an Agent’s authority; however, it may be simpler to execute a new POA or use the form requested than to argue the matter in court.
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Yes. Even a general Power of Attorney has limits. Exactly what those limits are will depend on state law; however, most states prohibit an Agent from self-dealing, making gifts in the Principal’s name, and making health care decisions for the Principal. There is a special type of POA known as an advance directive that can be used to give someone the authority to make health care decisions for you.
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Contact Us
If you have additional questions about a Power of Attorney in Arizona, contact the experienced Arizona estate planning attorneys at Morris Hall PLLC by calling 888-222-1328 to schedule an appointment.
