The current laws regarding power of attorney were established in 2006 when the Uniform Power of Attorney Act was implemented. This basically ensured that there would be a uniform standard for power of attorney law in every state, and that there would be basic legal elements that had to be adhered to when implementing a power of attorney, regardless of what state you live in.
There Are Three Key Definitions Used When Discussing a Power of Attorney
The Power of Attorney
The power of attorney is a written instrument that is executed by a person having the capacity to enter into a contract and grant authority over their personal affairs to another person or entity.
The attorney-in-fact is the person or entity granted the authority to act on the principal’s behalf and administer their affairs. This person is also known as the agent of the principal.
The Springing Power of Attorney
A power of attorney can take effect immediately upon the signature of the principal, or it can be triggered at a later time by certain events. This is known as a springing power of attorney. A springing power of attorney form becomes effective at either a specified future point or upon the occurrence of a specific future event.
A power of attorney can be either durable or non-durable and is generally used to manage the personal affairs of the principal when they cannot effectively do so for themselves, such as upon incapacitation or if they are out of the country when a specific event occurs.
Durable and Non-Durable Differences
The main differences between a durable and non-durable power of attorney is that a durable power of attorney continues to be effective upon the incapacitation of the principal while the non-durable power of attorney does not.
Nominating a Power of Attorney with the Help of a POA Form or Template
A power of attorney template or POA form can be used to nominate a power of attorney to represent an individual and their affairs in several different areas should they become incapacitated.
A Durable Power of Attorney Must Include One or More of the following Statements:
This power of attorney shall not be affected by subsequent incapacity of the principal
This power of attorney shall become effective upon the incapacity of the principal
Similar wording that shows the intent of the principal to confer authority to the agent in the event of the principal’s incapacitation
The specific wording should be used depending on the specific situation of the principal and what type of durable power of attorney is required. A power of attorney that is needed to be effective immediately upon signing should use the wording from the first statement above. If the power of attorney is to spring on the event of the principal’s incapacitation then the wording from the second statement should be used.
Requirements for a Power of Attorney
Creation and Effect of the Powers of Attorney
The Power of Attorney Law provides that any "natural person having the capacity to contract may execute a power of attorney."
In Order for a Power of Attorney to Be Legal, Three Requirements Must Be Met
The power of attorney must contain the date of execution
The power of attorney must be signed by the principal or by another adult in the principal’s presence and under the direction of the principal
The power of attorney is signed and acknowledged before a notary public or is signed by two witnesses
If the durable power of attorney is signed by two witnesses rather than a notary public, the witnesses must be adults and cannot include the attorney-in-fact representing the principal.
The Construction of Powers
A power of attorney form can incorporate any type of transaction that the principal wishes to have administered by the attorney-in-fact. These can include:
transactions related to real property or tangible personal property;
stocks and bonds;
commodities and options;
banking and other financial institution needs;
beneficiary transactions related to estates and trusts;
insurance and annuities;
claims and legal litigation;
personal and family maintenance;
social security or other government program benefits; and
retirement plans and tax matters.
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