Incapacity Planning Documents
Frequently Asked Questions
Your Durable Power of
Attorney
 What is a power of attorney?
A power of attorney is the grant of legal
rights and powers by a person, the "principal," to another, the
"agent" or "attorney-in-fact." The attorney-in-fact, in effect,
stands in the shoes of the principal and acts for him or her on
financial, business or other matters. The attorney-in-fact can do
on behalf of the principal whatever the principal may do on his
own behalf--withdraw funds from bank accounts, trade stock, pay
bills, cash checks-to the extent authorized in the power of
attorney. But this does not mean that the attorney-in-fact can
just take the principal's money and run. The attorney-in-fact must
use the principal's finances as the principal would for the
principal's benefit. In giving someone a power of attorney, an
individual is giving the other person the right to exercise a
legal right that the individual already has. People may not think
of themselves as being powerful, but in fact every time they spend
money, enter into contracts, sell property, cash checks, withdraw
money from a bank, decide where to live and choose what kind of
health care they want, they are exercising their legal rights and
powers. Normally, no one else can exercise these legal rights for
an individual. However, people have the right to delegate these
powers to someone else--to allow this other person to act in their
place. Giving someone a power of attorney does not limit an
individual's own rights in any way. It simply gives the other
person the power to act when or where the individual cannot act.
When does a power of attorney take effect?
Normally, a power of attorney takes effect
as soon as the principal signs it. If the principal wants to keep
the power of attorney from taking effect until some future event
takes place, he or she can execute a “springing" power of
attorney. A springing power of attorney takes effect only when the
event described in the instrument itself takes place. Typically,
this is the incapacity of the principal as certified by one or
more physicians. In most cases, even when the power of attorney is
immediately effective, the principal does not intend for it to be
used unless and until he or she becomes incapacitated. The
attorney-in-fact should discuss this with the principal so that he
or she knows and can carry out the principal's wishes.
Does a power of attorney take away the
principal’s rights?
Absolutely not. Only a court can take away
a principal's rights through a conservatorship or guardianship
proceeding. An attorney-in-fact simply has the power to act along
with the principal.
Are powers of attorney irrevocable?
Certainly not. A principal may revoke a
power of attorney at any time. All the principal needs to do is
send a letter to his or her attorney-in-fact telling the
attorney-in-fact that his or her appointment has been revoked.
From the moment the attorney-in-fact receives the letter, he or
she can no longer act under the power of attorney.
Can an attorney-in-fact make gifts of the
principal's money to the principal’s loved ones, including the
attorney-in-fact?
This depends on the wording of the power of
attorney and on the laws of the state in question. Some state
statutes require gift-making powers to be indicated on the
document. That is, the power of attorney must authorize the
attorney-in-fact to make gifts. In those states, the
attorney-in-fact cannot act without the specific authority to do
so. A well-drafted power of attorney will specifically give the
attorney-in-fact the right to make gifts (assuming that the
principal wants to give the principal that authority). The power
of attorney may limit the amount of the gifts or the people to
whom the attorney-in-fact may make gifts. If, on the other hand,
the document does not give the attorney-in-fact specific
authority, but it does give him or her a general grant of power to
stand in the principal’s shoes and do whatever he or she may do,
the attorney-in-fact still may be able to make gifts if the law in
the state in which the attorney-in-fact resides allows this. Just
remember that the attorney-in-fact is acting in a fiduciary
capacity and all of his or her actions under the power of attorney
must be in the principal's best interest.
Can the attorney-in-fact be held liable for
his or her actions?
Yes, but only if the attorney-in-fact acts
with willful misconduct or gross negligence. If the
attorney-in-fact does his or her best and keeps the principal's
interests in mind as the basis of his or her actions, the
attorney-in-fact will not incur any liability.
What if there is more than one
attorney-in-fact?
In most cases, when there are multiple
attorneys-in-fact, they are appointed "severally," meaning that
they can each act independently of one another. Nevertheless, it
is important for them to communicate with one another to make
certain that their actions are consistent. If they disagree or
take conflicting steps, that can create a serious problem. The
only solution may be a guardianship or conservatorship under which
a court would choose one of them (or someone else) to make the
decisions.
Can the attorney-in-fact be fired?
Certainly. The principal may revoke the
power of attorney at any time. All he or she needs to do is send
the principal a letter to this effect. The appointment of a
conservator or guardian does not immediately revoke the power of
attorney. But the conservator or guardian, like the principal, has
the power to revoke the power of attorney.
What kind of records should the
attorney-in-fact keep?
It is very important that the
attorney-in-fact keep good records of his or her actions under the
power of attorney; this is the best way to be able to answer any
questions that may be raised. The most important rule for an
attorney-in-fact to keep in mind is not to commingle the funds he
or she is managing with his or her own money. The accounts should
be kept separate. The easiest way to keep records is to run all
funds through a checking account. The checks will act as receipts
and the checkbook register as a running account.
Can the attorney-in-fact be compensated for
his or her work?
Yes, if the principal has agreed to pay the
attorney-in-fact. In general, the attorney-in-fact is entitled to
"reasonable" compensation for his or her services. However, in
most cases, the attorney-in-fact is a family member and does not
expect to be paid. If an attorney-in-fact would like to be paid,
it is best that he or she discuss this with the principal, agree
on a reasonable rate of payment, and put that agreement in
writing. That is the only way to avoid misunderstandings in the
future.
What does it mean to be a "fiduciary"?
A fiduciary is a person who is held to the
highest standards of good faith, fair dealing and undivided
loyalty with respect to the principal. The attorney-in-fact serves
as the principal’s fiduciary. The fiduciary must always act in the
principal’s best interest and keep his or her goals and wishes in
mind in making any discretionary decision. However, since the
fiduciary shares control with the principal, fiduciaries do not
have the same responsibility as trustees or executors, who have
total control over an estate or over trust assets. The fiduciary’s
duty covers only the level of care he or she takes in his or her
own actions as attorney-in-fact.
 Your Medical Directives
How does one draw up a health care proxy?
People should contact an attorney who is
skilled and experienced in this area. Many hospitals and nursing
homes also provide forms, as do some public agencies.
What is a living will?
Living wills are documents that give
instructions regarding treatment if the individual becomes
terminally ill or is in a persistent vegetative state and is
unable to communicate his or her own instructions. The living will
states under what conditions life-sustaining treatment should be
terminated. If an individual would like to avoid life-sustaining
treatment when it would be hopeless, he or she needs to draw up a
living will. Like a health care proxy, a living will takes effect
only upon a person's incapacity. But a living will is not
necessarily a substitute for a health care proxy or broader
medical directive. It simply dictates the withdrawal of life
support in instances of terminal illness, coma or a vegetative
state.
What is a health care proxy?
A health care proxy is a document executed
by a competent person (the principal) giving another person (the
agent) the authority to make health care decisions for the
principal if he or she is unable to communicate such decisions.
Why have a health care proxy?
If an individual becomes incapacitated, it
is important that someone have the legal authority to communicate the
individual’s wishes concerning medical treatment. This is especially true if the
individual and family members disagree about treatment. By executing a health
care proxy, principals ensure that the instructions that they have given their agent will be carried out in the event of such
disagreement.
Should a medical directive accompany the
health care proxy?
Yes. A medical directive provides the agent
with instructions on what type of care the principal would like. A
medical directive can be included in the health care proxy or it
can be a separate document. It may include specific instructions
concerning the initiation or termination of life-sustaining
treatment or a broader statement granting general authority for
all medical decisions that are important to the principal. The
health care proxy appoints an agent to represent the principal and
a broader medical directive provides guidance in less serious
situations.
When does a health care proxy take effect?
In general, a health care proxy takes
effect only when the principal requires medical treatment and a
physician determines that the principal is unable to communicate
his or her wishes concerning treatment. How this works exactly can
depend on the laws of the particular state and the terms of the
health care proxy itself. A medical directive, whether part of a
health care proxy or separate, will be followed when you can no
longer direct medical providers yourself.
What if the principal regains the ability
to communicate his or her own decisions?
If the principal becomes able to express
his or her own wishes at any time, he or she will be listened to
and the health care proxy will have no effect.
Who should have a copy of the health care
proxy?
The agent should have the original
document. The principal should have a copy and the principal's
physician should keep a copy with that individual's medical
records.
Who should be appointed as a health care
agent?
Since the agent is going to have the
authority to make medical decisions in the event the principal is
unable to make such decisions for him- or herself, the agent
should be a family member or friend that the principal trusts to
follow his or her wishes. Before executing a health care proxy,
the principal should talk to the person whom he or she wants to
name as the agent about the principal's wishes concerning medical
decisions, especially life-sustaining treatment.
Articles to review
Questions to ask the doctor
End of life decisions |
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