A power of attorney is a document that allows another person to act on your behalf in any financial, legal, or business matter. Generally, health agents are identified on a separate document used only for health issues.
A power of attorney can be limited to a specific purpose or a specific period of time or it can be a permanent general power of attorney.
We often sign specific or limited powers of attorney without realizing that we are signing such a document. When you ask your accountant to contact the IRS on your behalf or to buy a vehicle and authorize the dealership to do the registration, you are signing a specific power of attorney.
As useful as these specific powers are, we also need a permanent general power of attorney that gives another person extensive powers. The term “permanent” means that the granting of power continues until you die or until you revoke the instrument. The term “general” means that the document is not used for a specific purpose but encompasses a wide range of powers.
A permanent general power of attorney can take effect immediately, which would allow the selected agent to take action when it is executed, or it can “jump”, which would allow the agent to react only to a triggering event. For many married couples, the original representative is the spouse, who is given direct authority to act, but the successor only in the event of a disability. A permanent general power of attorney expires with the death of the client.
The required complexity of a permanent general power of attorney has evolved over the years, and particularly over the past three years. While the document was sufficient with a single paragraph that previously gave vague powers, detailed provisions are now required in order to do most business as an agent.
Kentucky law itself requires that many powers be specifically listed in order to respond to the powers. In many cases, however, federal agencies and even private institutions may require certain rules to be established to authorize the agent to conduct business.
While many specific powers may seem unnecessary at the time the document is executed, it should be noted that these powers often become necessary at a time when it is too late to sign a new power of attorney. While you may feel that your agent shouldn’t need the authority to change your life insurance plan, that authority could mean the difference between preserving your assets or a significant loss if your agent seeks Medicaid for you in the future.
If you are concerned about granting such authority, speak to your attorney about the possible consequences of failing to do so and a potential language restriction.
One of the greatest benefits of having a permanent general power of attorney is the prevention of unnecessary guardianship procedures. At all times in our lives we must have someone to handle legal, financial, and business matters for us. If we are unable to do so, a document covering the concern would allow another person to fulfill that requirement. However, permanent general authority is not a perfect substitute for guardianship in some cases.
Since permanent general authority does not remove your right to make your own decisions or manage your own affairs, you may still need a guardian if you do not have sufficient capacity but continue to act in a detrimental manner to your own interests. The permanent general power of attorney may include a provision that appoints a guardian if necessary so that you have even a small amount of control over who is appointed.
A permanent general power of attorney is a lifelong document that allows individuals to decide who should manage their affairs. Protect your rights, even if you are unable to work, by appointing the people you trust most.
Cynthia Griffin is a senior legal and estate planning attorney with Burnett and Griffin PLLC in Elizabethtown. She can be reached at [email protected].
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