People refer to Powers of Attorney as “General,” “Financial” or “Durable” Powers of Attorney, and in most cases, people are referring to the same document. “General” usually refers to the Principal granting the Agent all types of powers in the event the Principal does not act. Others refer to the Power as a “Financial” Power because for many, the real focus is to assist the Principal with financial actions. The “Durable” portion provides that the “Power” remains unaffected by the principal’s subsequent disability. Pennsylvania law now provides that all Powers are durable. 20 Pa.C.S.A. § 5601.1.
A Power of Attorney (often called a “POA”) is a notarized document that allows you to appoint a person (an agent) to manage your affairs if you become unable to do so. You are the “Principal” which means the person who is giving the “power” to another person. The “Agent” is the person designated by a principal to act on their behalf. For example, if you sign a Power of Attorney for your daughter, Joan, to help you write checks to pay your bills, you are the “Principal” and your daughter Joan is the “Agent.” When you grant someone a power of attorney, they are required to act in good faith and in accordance with your reasonable expectations.
In a typical POA, you provide your Agent powers to assist you with financial transactions (writing checks), entering into contracts, or selling real estate. However, Pennsylvania law provides a long list of powers that can be delegated to an agent. More recently, there have been several significant changes to the Power of Attorney law in Pennsylvania. There were significant abuses by Agents which caused the Legislature to make changes to the law which were effective January 1, 2015. Older Powers of Attorney, assuming they were properly prepared and executed, remain valid. However, it is wise to take another look at this as people and businesses (a bank) that may rely upon a power of attorney may be unfamiliar with old Powers and may only accept newer Powers.
A guardianship for an incapacitated person will be necessary where there is no advance planning (i.e., Power of Attorney). This means that if you do not have certain documents in place such as a Power of Attorney, guardianship procedures may be necessary to protect someone against his or her own incapacity. Guardianship procedures can be expensive, cumbersome, and the outcome is uncertain.
Preparing a POA is a common estate planning tool to assist you in the event of possible future incapacity and simply to assist you with certain transactions. It is a better alternative in most cases than placing assets in joint names. Please contact us so that we can discuss your plans with you in more detail. I look forward to hearing from you.
Mike Frisbie provides individuals and businesses with top level legal services for their everyday situations and problems. Together, they plan and prepare solutions with a litigator’s eye toward avoiding litigation. He takes pride and pleasure in helping people and businesses solve their problems.
This blog is designed for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship.