A power of attorney is a specialized legal document that grants a chosen individual – the agent – the ability to act in the document creator’s name – the principal – in a full or limited capacity for as long as the document specifies, and there is four notable power of attorney types in California. This could be a definite period of time, or something more abstract, limited by a certain fulfillment of an obligation (such as the sale or purchase of a specific property).
These different power of attorney types are as useful or useless as their provisions and specifications allow them to be. A well-written and thought-out power of attorney can be like a precision strike, a versatile yet specialized tool created for a set of situations in which you need someone to act in your name without giving them too much broad power.
Like similar legal documents, all power of attorney types still abide by fiduciary rules. This means that an agent is a fiduciary and has fiduciary duties – they must act in the principal’s best interests and may only act in good faith, provisions, and specified duties notwithstanding.
These power of attorney types are flexible but come in a few distinct flavors. In California, you can boil down most powers of attorney into four different types. These are:
- Durable powers of attorney.
- Limited powers of attorney.
- Springing powers of attorney.
- General powers of attorney.
Let’s go over each time individually.
Durable Power of Attorney
Estate planning and probate law often utilize a durable power of attorney. You see, most power of attorney documents are not valid if the principal is incapacitated. This means the agent loses the ability to act on behalf of their principal without a special provision.
This provision is what makes a power of attorney document durable. It makes it much more useful, as your authority now extends beyond incapacity – meaning decisions can be made in your name, even if you are going through surgery or are currently in a coma.
Limited Power of Attorney
A limited power of attorney is any power of attorney written with limited provisions – for example, one created only to authorize someone to sign your name in the sale of a property, but nothing else.
Springing Power of Attorney
A springing power of attorney is a document that only grants an agent authority if the principal is confirmed incapacitated. While useful in theory – because it means your agent cannot act on your behalf while you are still awake – a springing power of attorney requires that a medical professional offers a legally sound testament to the principal’s incapacity to activate it.
This can take precious time that is very valuable in moments of life and death – meaning your chosen agent would not be able to act in your name in a time-sensitive manner.
Furthermore, if you don’t trust someone not to abuse their power while you’re fully capable of rescinding their authority as an agent, why grant them the ability to act only when incapacitated?
General Power of Attorney
To summarize, a durable power of attorney works during incapacity. A limited power of attorney has limits based on provisions. Contrasting this, a general power of attorney is a standard document giving a person the right to act in your name for a period without the provision for incapacity.
Financial vs. Medical
A medical power of attorney allows an agent to say yes or no to what your doctor proposes while incapacitated. A financial power of attorney manages an incapacitated person’s estate – their bills, payroll, and other financial obligations.
Both are important. Both give an agent crucial power. And the same person or two completely separate agents can perform both.
Power of Attorney vs. Living Will
A power of attorney grants an agent limited or general authority to act as someone else. A living will, however, is a document that specifies a person’s medical wishes in no uncertain terms.
Living wills are especially relevant for people with progressive or chronic health issues, who are acutely aware of what decisions they might need to make for the future.
In California, an advance health care directive effectively combines the two. This means a healthcare power of attorney will authorize an agent of your choice to make crucial decisions in the event of your incapacity. At the same time, a detailed living will document allows you to guide both the agent and your doctors regarding your specific wishes, especially regarding specific procedures, issues, or concerns.
Do I Need a Power of Attorney?
A power of attorney is neither very complicated nor costly to draft and notarize. What ultimately makes or breaks the usefulness of a power of attorney is whether or not you know anyone you would trust to act competently as your agent.
Whenever applicable, a power of attorney ensures that someone you trust is in charge of making the critical decisions that affect your family, your legacy, and your life. They can’t supersede a will, but they can ensure that the last weeks of your life – from incapacity to death – are handled the same way you would have handled them had you been capable. Alternatively, suppose you’ve been in an accident and are slowly coming around. In that case, a power of attorney ensures that someone trusted can handle sensitive financial matters while you are gone.
Powers of attorney are also incredibly useful in a limited capacity. Suppose you are busy and unable to sign off personally on a property deal in another state. In that case, you can send a loved one to do it with a limited power of attorney explicitly designed to extend them only the authorization to sign the purchase of that specific property in your name.
Even if you are married, do not assume that your spouse’s powers extend beyond where they would in life. Your spouse cannot make financial decisions in your name or sign contracts you should have signed. Giving your spouse a durable or springing power of attorney enables them to act if you can’t.
Ultimately, powers of attorney are more flexible and applicable than most people give them credit for. They can be a handy tool at a relatively low investment in terms of cost and legal complexity. They are also relatively safe when drafted competently. You can limit a person’s authority or ensure that contingencies are in place to revoke their ability to act as your agent if they do not act in your best interest.
Of course, the human element in a power of attorney is crucial as well – limiting them too much might lead to a rigid document that does not give your agent the ability they need to act on the circumstances of the situation – circumstances you may not have foreseen before your incapacity.
When drafting a legal document, always discuss your options and considerations with a professional. Online templates and DIY boilerplate formats are helpful for understanding the structure of a document, like a power of attorney. However, they are no substitute for a personalized legal document. Consider discussing this with an estate professional at Werner serving areas such as Newport Beach, Oxnard, and Pasadena.