Power of Attorney Rationale - Can Someone Act For You?

Friday, 06 March 2009

Most of us have wills that will conclude our circumstances after death.  Have we also provided for the eventuality that often precedes death - incapacitation?  Insurance records reveal that a 35-year-old is four times more likely to become disabled than to die before reaching 65.

If injury or illness struck you, could your family gain access to bank accounts and the safe deposit box?  Is someone empowered to cash checks payable to you?  How would they pay pressing bills?  Could they take care of your investments, make claims on your behalf or otherwise manage your assets?  A local court could appoint a guardian, or conservator, of course, but the legalities might consume time and money.

Those who have done a great deal of work with older citizens recommend granting a power of attorney to a trustworthy individual, authorizing that person to act in his or her place in such a situation.  An ordinary power of attorney will not be sufficient, because it becomes ineffective just when it is needed most, when the grantor becomes incapable of independent actions.

Either a durable power of attorney (“valid notwithstanding my incapacity”) or a spring power of attorney (“becomes effective only when I become incapacitated”) is needed.  Not just older people need this power of attorney.  Younger individuals can also be struck with disabling afflictions or accidents.

It is important to give a power of attorney only to someone who can be trusted completely.  The power of attorney can be canceled upon recovery, but in practice, you would have to get back all copies.  That may not be easy, considering there can be copies of which you may be unaware.  If the person who held the canceled power were to go to your bank to take out your savings, it is possible that bank officials may not have received notice the arrangement had been voided.

In addition, your bank, insurance company or other institution will recognize a power of attorney only if it follows a special format.  A Living Will or Medical Power of Attorney is a different matter, having to do with medical decisions, and does not replace the critical need for a durable or spring power of attorney.  It is best to consult your attorney about this issue.

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