Executing Specific Power of Attorney

A specific power of attorney is a document that permits you to act as an agent for someone who has granted you the right and is now unable to handle their own affairs. It is not a will, but it is a document that gives you control over financial and health care decisions for another. Power of attorney is executed in the event that the assignor becomes too incapacitated to make decisions, either through mental or physical illness.

In order for a power of attorney to be valid, the person who assigns it must be mentally competent when signing the agreement. This means that they must understand the powers that they are giving you and the implications of having someone else make decisions. If there is any question about an individual's capacity to make decisions when assigning power of attorney, that person should be evaluated by a physician to determine competence, with the results furnished in writing by the physician.

What does it mean to be incapacitated?
Being incapacitated means not being able to understand information that is relevant to a decision and not being able to evaluate the likely consequences of making it. The power of attorney form will document the terms for being incapacitated. Some situations that may lead to incapacity include coma, whether natural or medically induced, severe mental illness or dementia associated with degenerative illnesses such as Parkinson's Disease or Alzheimer's.

A licensed medical doctor determines incapacity. A specific physician may be named to determine a person's incapacity or the document may state that two doctors must agree on the assignor's capacity to make decisions before the power of attorney is executed. Most businesses and organizations will not recognize your power of attorney until there is written documentation from a physician determining the assignor's inability to make decisions for him or herself.

Making decisions
When power of attorney is executed, you, as the agent, are expected to act in the assignor's best interests. Specific powers are defined within the document. The range of decisions for someone with power of attorney includes buying and selling real estate, managing property, conducting bank transactions, investing money, making legal claims and conducting litigation, making gifts on the assignor's behalf and taking care of taxes and retirement matters.

In addition, the power of attorney may be responsible for the assignor's health care, up to and including the decision to issue a DNR or to end some types of treatment. These responsibilities will be spelled out in the agreement. The agent must consult with the assignor, those who take care of him or her and close family and friends. The agent is the assignor's spokesperson and representative.

If you were assigned as someone's power of attorney, you have been put in a position of trust. It is important for assignors to choose someone they trust, someone who has their best interests in mind as the agent of their power of attorney. Typically, individuals choose a spouse or partner, sibling, adult child or parent. The assignor must keep in mind that the person appointed as power of attorney will have access to their bank accounts, Social Security checks, pension and retirement funds.

In executing a power of attorney, an agent is only held responsible for misconduct that is intentional, not for unknowingly doing something wrong. This clause usually appears in the power of attorney form and is there to encourage the agent to accept the responsibility. There is usually no compensation or reward for accepting the agent role.

Power of attorney is in effect until the assignor dies or recovers from the illness sufficiently enough to resume control of personal affairs.

Power of attorney can be revoked as long as the assignor has the capacity to do so. If the assignor feels that you are making decisions that are not in his or her best interests, the assignor can request a court hearing to review the situation. The procedure for revoking their power of attorney depends on the type of power of attorney that was assigned.

In some cases a successor agent may be named in the power of attorney in the event that the immediate agent is unable to make decisions for them or to do so. A successor agent may be a good idea if the assignor names their spouse as their immediate agent and the spouse is diagnosed with an incapacitating illness.

Conflicts and questions
Acting as an agent is never an easy task. You can make the process easier by talking to the assignor long before your services are needed. Know where you can find needed information about bank accounts, investments and insurance policies. Go over your responsibilities, particularly with regard to health care decisions. Understand that the assignor's wishes may differ from the choices you would make for yourself.

If you have strong moral or religious objections to the instructions included in the power of attorney, make them known. You'll either need to remove yourself from consideration for this role or set your feelings aside if you need to make a choice you disagree with. Remember that you've been given this power because of the deep trust the assignor has in you.

When it comes to financial decisions, you may need to consult with a financial advisor or the assignor's advisor or CPA for advice. As a general rule, your goal will be to preserve any existing assets. Remember that this isn't your money and be conservative. Shifting assets to improve growth or capitalize on an opportunity may be grounds for revoking your power of attorney.

In some cases, an assignor will choose someone other than a spouse or immediate family member to hold power of attorney. This can put you at odds with the family, who may disagree with the choices that you make. In these cases, it can be helpful to remind the family that you have been chosen for your expertise or because the assignor knows that emotions will not sway your decisions. You may find it helpful to sit down with a lawyer and review the terms in the power of attorney document so that everyone understands your specific responsibilities.