French and Raven have defined five forms of power: legitimate, reward, coercive, expert and referent. Six years later Raven added the sixth power base, which was informational power but let’s not get into that now. If you were to observe the 6 forms of power, you would conclude that the durable power of attorney is most possibly under the legitimate power. The latter comes from the belief that a person has the formal right to make demands and to expect others to be compliant and obedient. The president, prime minister or monarch has legitimate power. The same goes to CEOs, fire chiefs, and religious ministers. And if you think about it, durable power of attorney is almost the same as the power the CEO has over a company.
A power of attorney (POA) is a legal document that gives someone you choose the power to act in your place. So the document allows an individual, called to be the principal, to appoint someone to act as an agent on his behalf. The agent, called to be attorney-in-fact, can take care of important matters for the individual. The matters can include managing finances, selling a property, paying bills and even authorizing medical care.
When did a power of attorney appear?
The concept of the durable power of attorney came alive in 1969 when the National Conference of Commissions on Uniform State Laws declared the Uniform Probate Code. Ten years past, the provisions regarding the durable power of attorney were adopted and published as the Uniform Durable Power of Attorney Act (UDPA.) All fifty states of the US recognize some version of the durable power of attorney. However, there are certain powers that one cannot delegate. Those include the powers to make, amend or revoke a will, change insurance beneficiaries, contract a marriage and vote. Anyone who is at least 18 years old and fully understands the provisions of the document, has at least one witness to their signature can grant a durable power of attorney.
Fiduciary duty of an agent
Moving forward, the when a person, let it be a family member or an attorney, accepts the role an agent, or attorney-in-fact to a power of attorney, it creates a fiduciary relationship. Accordingly, that person has a legal duty: to act solely in the principal’s interest. The fiduciary duty of an attorney-in-fact is a very serious matter for the U.S. legal system. That is because the principal takes a position of vulnerability by trusting the agent to act on his behalf, to use good faith and diligence when handling his affairs.
General power vs. durable power of attorney
It is important to understand the difference between the power of attorney and the durable power of attorney. In the case of a general power of attorney, this is what happens. The document specifies a purpose and limits the agent’s scope of action. Remember, that a non-durable power of attorney does not allow the agent to act in the interests of the principal if the latter becomes incapacitated. The agent finishes his/her job and has no more authority when the transaction or purpose is complete and the non-durable POA becomes invalid.
Moreover, the durable power of attorney carries very similar authority, which can be very specific or very broad, but the pact remains in effect if the principal becomes incapacitated. People, who are planning retirement care, for example, will grant a durable power of attorney to someone whom they trust to make decisions on their behalf.
To put things in a more simple way, with a valid power of attorney, your trusted person will be legally permitted to take care of the important matter for you if you are unable to do so yourself. Usually, the durable power of attorney concerns two topics: medical and financial.
Medical power of attorney
The medical power of attorney is a document that set out your wishes for health care if you are unable to speak for yourself. It can be a matter of being too ill or injured. So what happens when you make a durable power of attorney for health care? You basically give a power to your trusted person to manage your medical care. And also to make decisions regarding your health care when you are incapable of doing it yourself. Legally, your trusted person can be called your “agent.” Sometimes the person is also called “attorney-in-fact,” or “health care proxy.”
And if you are afraid of giving so much power to someone else you can use the second type of health care directive. We call it “Healthcare declaration” or “living will.” By this, you can provide written health care instructions to your agent.
Financial power of attorney
You give someone the authority to take care of your financial transactions on your behalf. Financial powers of attorney can be very simple like closing a real estate deal. But there are also very comprehensive ones. For example, they can be designed to give authority to someone else to manage all your financial affairs for you if you become incapacitated. The latter is the durable power of attorney for finances.
You can choose someone you trust to be your agent. You need someone who has a good common sense and doesn’t have to be a financial expert. But it is always better to go for professionals, who know what they are doing.
Immediate and springing powers
There are two types of durable power of attorneys: immediate and springing. Immediate power of attorney takes effect as soon as you implement the durable power of attorney. Unlike immediate power, the springing is intended to “spring” into effect when a certain event occurs, for example, the disability of the principal.
You might not think so yet, but the durable power of attorney has some advantages. Before the concept, there was only one way of taking care of the affairs of an incapacitated person. You had to appoint a guardian. And as you know, the latter is a very complicated and a costly court proceeding. Unlike appointing a guardian, a durable power of attorney is a very easy and inexpensive procedure. It does not even require a judicial proceeding. Are you are afraid of taking the step and going through with a power of attorney? It can be revoked or revised at any time as long as the principal is competent to make decisions.
Why are we scared?
Sometimes, people may push the thought of preparing and signing a durable power of attorney away. Specifically, elder people sometimes may feel as if they are losing independence. And I agree, this is quite an unpleasant topic. You may find yourself denying and not acknowledging that you need a durable power of attorney. There is another fear that people usually have. It is the thought that the agent you give power to may go against your wishes. The durable power of attorney may have some differences from state to state, for example, it may differ from California to New York.
The most important part of the whole process is probably choosing your agent. You got to do it wisely and need to discuss the scope of the responsibilities. The agent should be someone that you trust. And it should be someone who will not take advantage of you if you are unable to do it yourself. That is why people usually appoint their family members of friends as their agents. What if you haven’t made a durable power of attorney and something happens to you? Your family may have to go to court to get the authority to handle your affairs. So think about it and act wisely.