A power of attorney is a legal authority granting the legal right to one individual (“agent”) to act on someone else's behalf in a legal or business matter. The agent is a fiduciary for the principal and is held to the highest standard of conduct in their dealings on behalf of the principal.
An attorney power is routinely granted to allow the agent to take care of a variety of transactions for the principal, such as executing a stock power, handling a tax audit, or maintaining a safe-deposit box. It can be written as either a general, limited or special power and is generally terminated when the principal dies or becomes incompetent. The principal can revoke the power of attorney at any time. Certain powers cannot be delegated, including the powers to make, amend, or revoke a will, change insurance beneficiaries or contract for marriage.
A special type of power of attorney is the "durable" form, which continues the agency relationship beyond the incapacity of the principal. Absent a durable power of attorney, a family member must obtain a legal guardianship to handle your affairs, a legal process that can be complex and costly.
In Pennsylvania, a new power of attorney law was adopted in 2000. Attorney documents drafted before 2000 are still valid, but they may not include the appropriate language to allow the agent to act in the broadest possible manner for the principal, including the power to gift assets, for example.
For most people, a will and durable power of attorney accomplishes the same estate goals as a revocable living trust at a lower cost. The attorney power is a vital estate planning document so consult an attorney expert in estate planning matters to draft or refresh yours.
