A power of attorney is a powerful and flexible document that allows you (as the “principal”) to delegate to a trusted third party (the “agent”) the power to act on your behalf. Once a power is granted by a principal, an act performed by an agent pursuant to a power of attorney has the same effect and binds the principal as if the principal had performed the act.
Why Should I consider a power of attorney?
There are a number of situations where having a trusted agent, such as a spouse or a child, to act on your behalf may be necessary or convenient. For instance, you may need an agent to act on your behalf if you are:
- Mentally or physically incapacitated due to illness, accident, or old age.
- In the military deployed overseas or training.
- Traveling abroad for personal or business reasons.
- In deteriorating mental or physical health.
In such cases, you may want your agent to have access to your bank accounts, medical records and/or business records and have the ability to conduct transactions on your behalf, pay your bills and make important decisions that you may not be capable of making.
What powers can I delegate to my agent?
In Pennsylvania, you can delegate broad powers to your agent by executing a “general power of attorney.” A general power of attorney grants your agent all of the powers and rights that that you have. These powers would include, but not be limited to: the power to manage, buy and sell real estate and securities, the power to manage your day-to-day financial affairs, the power to control and make withdraws from your bank deposit accounts, the ability to borrow money and give security therefor.
You can also utilize a “limited power of attorney” which limits your agent’s authority to act on your behalf by delegating only specific enumerated powers and narrowing the scope of those powers. For example, a limited power of attorney can grant your agent the power to sign certain documents or control and make payments from your bank accounts only for a specified period of time while you are out of the country.
There are certain powers that may be undertaken by your agent only if they are expressly included in the power of attorney. These are the power to:
- Create, amend, revoke, or terminate a trust.
- Make a gift.
- Create or change rights of survivorship.
- Create or change a beneficiary designation.
- Delegate authority granted under the power of attorney.
- Waive the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan.
- Exercise fiduciary powers that the principal has authority to delegate.
- Disclaim property, including a power of appointment.
- Access the electronic communications and digital assets of the principal. As used in this paragraph, the following words and phrases shall have the meanings given to them in this paragraph unless the context clearly indicates otherwise.
When do the agent’s powers begin and end?
A power of attorney can be effective immediately upon execution thereof or it can be a “springing power of attorney” which commences only after certain conditions are being met. For example, a principal can designate that the power of attorney only becomes effective if they become incapacitated or unable to make the decision for themselves.
Unless it says otherwise, a power of attorney is usually terminated when the principal dies or becomes incompetent. A power of attorney will also terminate when the principal rescinds the power of attorney.
Or you can use a “durable power of attorney,” which remains effective even after you become incapacitated. A durable power of attorney will also terminate when the principal passes away or the principal voluntarily rescinds.
Are there any limitations on an agent’s authority?
Generally, a principal can limit the scope of an agent’s authority to act only in specific instances or subject to certain restrictions. Pennsylvania law, however, imposes certain duties on your agent including duties to:
- Act loyally for the principal’s benefit.
- Keep the agent’s funds separate from the principal’s funds unless:
- Act so as not to create a conflict of interest that impairs the agent’s ability to act impartially in the principal’s best interest.
- Act with the care, competence and diligence ordinarily exercised by agents in similar circumstances.
- Keep a record of all receipts, disbursements and transactions made on behalf of the principal.
- Cooperate with a person who has authority to make health care decisions for the principal to carry out the principal’s reasonable expectations to the extent actually known by the agent and, otherwise, act in the principal’s best interest.
- Attempt to preserve the principal’s estate plan, to the extent actually known by the agent, if preserving the plan is consistent with the principal’s best interest based on all relevant factors.
How can I create a power of attorney?
Under Pennsylvania law, a principal must sign a power of attorney before two witnesses and a notary public. Also, the agent must sign a form acknowledging that they know of the responsibilities that come with being an agent and agree to carry out their duties as called upon. The form of acknowledgement is contained in the Pennsylvania Power of Attorney law.
A power of attorney can be used in conjunction with your estate planning and with documents such as an advanced medical directive which authorizes third parties to make medical decisions on your behalf. While there are a number of forms available online, it’s best to consult with a qualified attorney about what your power of attorney should provide.
By talking with a qualified attorney, like Val DiGiorgio of Omnis Law Group, you can determine whether executing a power of attorney is the right move for you. Val can be reached at VFD@Omnislawgroup.com, you can contact the firm online, or call 484-81-OMNIS to set up an initial consultation.