A Power of Attorney is an important and powerful document that gives one or more persons the power to act on your behalf as your agent for property and financial matters. The person who grants power of attorney is referred to as the principal. The agent is referred to as an attorney-in-fact. Despite the name, the attorney-in-fact does not have to be a lawyer, and cannot act as an attorney-at-law for the principal. A power of attorney can be narrowly limited to a certain activity, such as dealing with real estate transactions, or it may be very broad in scope, giving the attorney-in-fact the power to manage many affairs for the principal.
The power of attorney can be designed to give temporary or permanent authority to act on your behalf. The power may take effect immediately, or only on the occurrence of a future event. The latter is called springing power of attorney, as the power "springs" into effect when the event occurs, usually a determination that you have become incapacitated or incompetent to make decisions for yourself due to a mental or physical disability. A power of attorney can be designed to be in effect only while the principal is able to make decisions (non-durable), or it can remain in effect if/when the principal becomes incapacitated or incompetent (durable). Regardless of what version, the power of attorney becomes null and void as soon as the principal dies, or if there is a termination date written in the document and that date has passed. You can revoke your power of attorney at any time and for any reason. However, you must give written notice to your attorney(s)-in-fact that their powers have been revoked.
There are three types of powers of attorney: statutory short form, limited durable, and general durable.
✦ The statutory short form power of attorney uses a concise form, provided by Minnesota law, that allows the principal to appoint one or more individuals or an authorized corporation to act as attorney-in-fact. The scope of this power of attorney is limited to thirteen particular powers listed on the short form, and the principal may select any number of them, or all of them. Additional powers cannot be added to the short form, nor can the language be modified. The statutory short form, if not revoked or deemed invalid, has statutory protections that provide for damages caused by any party refusing to honor it. Despite its concise nature, the statutory short form power of attorney is a powerful instrument which grants powers for many of the day-to-day needs of a principal.
✦ The limited durable power of attorney is designed to be a very narrow power that accompanies a revocable trust.
✦ The general durable power of attorney is much broader in scope than the statutory short form type, and perhaps its biggest advantage is that it can be more closely tailored to the principal's specific needs. However, the general durable power of attorney does not enjoy the statutory protections from rejection by third parties, and some parties may refuse to honor the instrument altogether.
With a valid power of attorney, your attorney-in-fact can take any action permitted by the document. The attorney-in-fact often must present the original document to invoke the power, such as in cases of real estate transactions, transferring motor vehicle titles, opening/closing bank accounts, or dealing with securities.
The attorney-in-fact is not a guardian. You cannot be forced to move or forced to do something you don't agree to. You do not lose the right to control your property or money and you don't lose the right to make decisions about your life. You are free to amend or revoke the power of attorney at any time, for any reason or for no reason at all.
Why would you want to give such sweeping powers to someone? One reason is convenience. It may be more practical to allow your attorney-in-fact to buy or sell assets. You may need someone to handle personal and business affairs while you are traveling. Another reason is to prepare for possible situations when you may not be able to act on your own behalf due to incapacity. Such a disability may be temporary or permanent.
If you have not executed a power of attorney and you become unable to manage your personal or business affairs, it may become necessary for a court to appoint someone (guardian or conservator) to act on your behalf. If a court proceeding (intervention) is needed, you may not be able to choose the person who will act for you. A power of attorney allows you to choose who will act for you and defines his or her authority and limits.
In Minnesota, you can choose specific matters for which to grant power to the attorney-in-fact, such as banking transactions, real estate transactions, personal property, insurance matters, dealing with government entitlements, etc. A power of attorney is a legal form but is not a court form. Thus, you cannot use a power of attorney to bring a lawsuit on your behalf--only a licensed attorney can do that for you. Furthermore, a power of attorney cannot be used to grant powers relating to health care decisions. For that you will need to execute an Advance Health Care Directive.
You may wish to appoint a family member to act on your behalf. Many people name their spouses or one or more of their children. If you choose to name more than one person to act as attorneys-in-fact at the same time, be aware of the possibility that all may not be available to act when needed, or they may not agree. In some cases it may be wise to denote that each of the attorneys-in-fact may act independently. Regardless of how you name co-attorneys-in-fact, you should name one or more successor attorneys-in-fact. There are no special qualifications required for someone to act as an attorney-in-fact, except that the person must be a competent adult, 18 years of age or older. The most important criteria is that the person be someone you can trust, as they will be given access to your property and financial assets and therefore holding a great deal of power.
Crafting an effective power of attorney is not a process that should be taken lightly, nor one to be attempted without good legal consultation. If the power of attorney instrument is completed incorrectly, is missing information, or executed improperly, it may be rejected later by some institutions. Thoughtful planning needs to be put into the document to decide who will be your trusted fiduciary and what they will be able to do on your behalf. Regardless of the format, it is prudent that you seek the advice of a qualified attorney, who can craft a power of attorney instrument that meets your needs.