What Is A Power Of Attorney?

A power of attorney is a legal document in which you (the Principal) give someone else (the Agent) the power to make decisions on your behalf. Why would you ever want to do that? What if you were overseas, serving in the military, or traveled extensively and needed someone to manage your affairs in your absence? Or what if you are injured in an accident? While you are recovering, decisions need to be made, and your finances handled. If you do not have a power of attorney, someone will have to petition the court to obtain the authority to manage your financial affairs. With a power of attorney, the person you chose has the legal right to act on your behalf, for example, to pay bills, or manage investments.

To create a valid power of attorney under Minnesota law, Minnesota Statutes Section 523.01 states that the document must be in writing. It must be signed and dated by the principal in front of a notary public. The document must clearly state what powers are granted to the agent. The agent, also called an “attorney-in-fact,” does not have to be a lawyer and cannot act as a lawyer for the principal. The agent does need to be a competent adult.

A power of attorney is an important tool to help you manage your affairs. Everyone’s estate planning needs are different. You may need a general power attorney, or another type of power of attorney, such as:

  1. Durable Power of Attorney: A durable power of attorney will remain in effect even if the principal becomes incapacitated. A person is incapacitated when he or she is unable to legally act on his or her own behalf because of mental or physical reasons. Durable powers of attorney go into effect when signed by the principal and stay in effect until the principal’s death. To create a durable power of attorney, Minnesota law states that the document includes words showing the intent of the principal to create a durable power.
  2. “Springing” Power of Attorney: A springing power of attorney is similar to a durable power, except for its effective date. Instead of going into effect at the time of signing, these powers only go into effect when the principal becomes incapacitated, or unable to make his or her own decisions. Usually, a doctor makes this determination. Then the power of attorney “springs” into existence.
  3. Limited Power of Attorney: A person who wants to create a power of attorney for a particular purpose, may want a limited power of attorney. These are often used in real estate transactions when one party is unable to be present at a closing. A limited power of attorney does not continue beyond the specific situation.

Choosing the person who will act on your behalf under a power of attorney is an important decision. It should be someone you trust completely. You should choose someone you know very well, who is honest and responsible. If your agent will be handling your financial matters, you need to choose someone who has demonstrated fiscal responsibility. There are limits to what the agent may do. For example, your agent may not create, alter or revoke your will, vote on your behalf in a public election, or represent you in court. You, as the principal may put a time limit on the power of attorney and also has the right to revoke or cancel the Power of Attorney at any time while competent.

If no time limit is specified, a durable power of attorney ends upon your death. There are other circumstances which may affect your power of attorney. These include fraud or undue influence. If you become divorced and your spouse is your agent, the divorce will terminate your durable power of attorney.

Life is full of unexpected developments. When something unanticipated happens to you, a power of attorney will help protect you and your loved ones. For more information,  contact us today.