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Power of Attorney: Know Your Rights

Notary documentsBy: Alex Lindvall

For many Arizonans there is no document more import than a power of attorney.  A power of attorney is a relatively straightforward legal document that gives a designated individual the right to act on another’s behalf.  Powers of attorney can come in several forms.  The document can authorize someone to act on a specific matter (e.g., granting someone the authority to sell your home).  Or the document may be classified as a “durable” power of attorney.  A durable power of attorney grants the agent (the person being granted power by the “principal”) much broader power.

These agreements are usually used in the context of a parent-child relationship.  As the parent gets older, they may want to prepare for a situation in which they will not be able to make an informed decision on a financial matter.  A power of attorney allows their children to make those difficult decisions on their behalf.  Under Arizona law, a durable power of attorney can be granted immediately or upon the incapacitation of the principal.  (See A.R.S. § 14-5501.)  Most parents prefer a power of attorney that does not take effect unless they are incapacitated—often called a “springing” power of attorney.  Many attorneys, however, warn against the pitfalls associated with springing powers of attorney.

 

Type of Power of Attorney Effect Note
Specific power of attorney Grants an agent the authority to act on one specific issue. Very limited—as the principle’s age increases, the more a durable power of attorney is recommended.
Springing specific power of attorney Grants an agent the authority to act on one specific issue once another event has occurred. “Once another event has occurred” usually refers to the incapacitation of the principal.
Durable power of attorney Grants an agent broad authority to act on the principal’s behalf. The broadest granting of authority—use with caution.
Springing durable power of attorney Grants an agent broad authority to act on the principal’s behalf once another event has occurred. Usually contingent upon the incapacitation of the principal. However, incapacitation can often be difficult to prove.

 

Unfortunately, many experts say, the power of attorney is often abused—either by culpable agents or by criminals who forge the documents.  Accordingly, banks and other financial institutions are often wary of powers of attorney by themselves.  They often require additional proof to validate the document.  This is where springing powers of attorney can become burdensome.  If a springing power of attorney is contingent upon the principal’s incapacitation, the agent must provide documentation to the bank demonstrating the principal’s incapacitation—usually by way of physician certification.  However, medical privacy laws and recalcitrant physicians can often make proving incapacitation a difficult task.

Just under half of all Americans over the age of seventy currently have a power of attorney.  If you are thinking of acquiring a power of attorney: (1) make sure you select the type of power of attorney that is best for you; (2) make sure the agent you assign is trustworthy; (3) make sure you can provide additional proof of the validity of your power of attorney; (4) take heed of State law governing these agreements; and (5) read the fine print of your agreement to ensure you are signing a document that suits you.