What is a Power of Attorney?

A power of attorney is a legal document you can create/sign to give another person (known as the agent) the ability to make financial and medical decisions on your behalf. 

What is a “Durable” Power of Attorney?

A “durable” power of attorney is a term that explains when the power of attorney kicks in and how long it lasts, in essence. 

For example, you might execute a specific power of attorney for a friend or family member to make certain decisions for your children in case of emergency when you go away for an extended vacation. That type of power of attorney would typically be effective immediately or on a designated date in the near future, and then terminate on a designated date (such as the date you plan on returning from your vacation). 

In contrast, a durable power of attorney wouldn’t take effect right away. Rather, it only becomes effective once you become incapacitated. Importantly, (and where the name comes from), the power of attorney is NOT affected by your disability or incapacity. Under Arizona law, a durable power of attorney MUST contain language expressing that it can be exercised if you (aka the principal) become incapacitated and no matter how much time passes from the time you create the power of attorney. Without that language, the power of attorney will not be effective after you become incapacitated, which would defeat the entire purpose for having it. 

It is possible to draft a durable power of attorney to allow it to become effective prior to your incapacity. This would likely be done by executing a certification indicating your clear intent for the power of attorney to take effect. If creating a power of attorney that has this type of option and/or before voluntarily putting a power of attorney into effect, you should discuss the effect of doing so with an attorney before proceeding because of how much power you will be giving to another person.

For the rest of this article, all references to a POA will be to a Durable POA.

So, What Exactly Does a Power of Attorney (POA) Do?

Ok, you read the simple explanation above, and you understand a POA gives someone else the power to make decisions on your behalf. But what EXACTLY does a POA do? 

Simply put, a POA gives someone to do just about anything you could do yourself, such as open bank accounts, transfer money, pay bills, hire professionals for help, deal with lawsuits, refuse medical care, change doctors, and more. 

For estate planning purposes, the whole point of having a POA (again, you should have a POA for financial decisions and one for medical decisions) is to allow someone you trust and designate to be able to immediately step in and make (just about) any and all decisions on your behalf that you could make yourself so you can avoid going to court to have a guardianship and/or conservatorship created for you. 

There will be some limitations, such as not allowing your agent to take gifts back that he/she gave to you earlier, use your money for the agent’s benefit, etc. However, if you don’t give a broad spectrum of powers to your agent and something comes up and the agent isn’t permitted to address that particular issue, then a guardianship and/or conservatorship case will need to be initiated anyways. This would defeat one of the main purposes of having the POA’s in the first place. 

Who Should I Pick to be my Agent for my POA. 

Because a POA grants such broad powers to your designated agent, a great deal of care and thought should be put into choosing your agent and any successor agents. 

For married couples, most people will pick his/her spouse as the first agent, and then often identify a close family member as a backup. That being said, if you and your spouse are getting divorced, or have since been divorced (or legally separated, or had your marriage annulled), you should READ THIS ARTICLE ASAP. 

In addition to choosing someone that is trustworthy, you might want to consider other pragmatic factors. For instance, you might want a particular child to be your agent. However, if that child lives across the country, that selection could be burdensome and problematic as that child would need to travel to deal with certain aspects of your care and finances. Distance alone doesn’t rule out selecting an appropriate agent; however, it should be a consideration if you have multiple options. 

Other factors and considerations would be whether your potential agent(s) have money issues of their own, have friends or spouses that are antagonistic towards you, and/or have other life issues that could detract from the responsibilities of being your agent. In short, you wouldn’t want to select an agent to act on your behalf if there are circumstances that could likely lead to that agent acting contrary to your best interests. 

In sum, you should pick someone for your POA’s that you trust with your life, because in a sense your life will be in their hands if you become incapacitated and your POA goes into effect. 

Does My Agent Get Paid?

Typically, no. An agent under a POA will not get paid unless payment provisions are specifically spelled out in the POA, or there is a specific contract addressing payment. Almost universally, for estate planning, your POA will not get paid for his/her acts as agent. Thus, whomever you pick will need to be someone who will want to help you out as they will basically be doing so for free. Your agent can (and should) be reimbursed for any costs and/or fees incurred in carrying out his/her responsibilities under the POA on your behalf. But again, they will not get paid a fee like a Personal Representative or Trustee might get paid for working on your estate or Trust. 

What are the Technical Requirements for a POA?

There are some types of POA’s that have more relaxed requirements, such as a POA for dealing with vehicle titles. For estate planning purposes, a POA needs to be in writing and clearly state your intent to create a POA. It will need to clearly identify your agent(s). It will need to be signed by you (or by someone you direct to sign while you’re awake and present) and witnessed. The witness cannot be an agent under the POA, or the spouse or children of the agent. This requirement is intended to protect people from being coerced into signing a POA. Finally, the POA needs to be signed before a notary and contain the notary’s seal. 

For a health care POA, the witness also cannot be a health care provider involved in your care. Also, if only witnessed by one person, that person cannot be someone who will receive anything from you via a testamentary document (such as a Will). Although a health care POA only needs to be witnessed by one person or notarized, best practice would be to have it witnessed and notarized. Compare A.R.S. 14-5501. 

Do I Need a POA if I’m Married?

In a word, yes. This may surprise many people, but your spouse is not legally authorized to do all of the same things you are allowed to do for yourself. 

For instance, your spouse isn’t permitted to do anything with your separate property. Even in Arizona, which is a community property state, spouses can still own separate property. If you were to become incapacitated and owned separate property, your spouse would not be able to do anything with that property without either court intervention (such as a conservatorship) or a POA. This could be problematic for example if you own separate stocks and the market is tanking, or you own a rental property and it needs ongoing management. Without a POA, your spouse couldn’t act on your stocks to stop the bleeding or manage and preserve your rental property. 

Even if you don’t have separate property, but you just have an account that is only in your name your spouse would likely not be able to access funds in that account. Community property laws aside, the financial institution probably would not let your spouse access an account that is held only in your name (because the institution doesn’t know whether those funds are your separate property or not, and they won’t want to be held liable for allowing your spouse use those funds). 

Similarly, even though you’re married, you still have privacy rights, such as your health care privacy. Under HIPAA, your spouse would not be privy to your medical records. While health care providers would consult with your spouse in emergency situations, there will be some limitations to how much info your spouse will be able to have and decisions your spouse will be able to make without a health care POA. 

If you become incapacitated and you don’t have a POA in place, chances are your spouse will need to go to court and be appointed as your guardian and conservator. This will cost at least hundreds of dollars in court fees, as well as time dealing with several court documents when there are more important things to worry about (You!). 

Thus, you definitely still need a POA even if you are married. 

How Much Does a POA Cost?

If you need a POA, then chances are high that you likely don’t have a Will either. Our basic Estate Plan package includes a Will, POA (finance and medical), Living Will, and health care authorization (for your POA). This package is $500.00. Again, if you don’t have a POA alone (not even talking about the problems of not having a Will), you will spend a little more than half of that amount on court fees for a guardianship and conservatorship, plus potentially thousands more if attorney help is needed to navigate probate court to get the guardianship and conservatorship in place. 

If you only need a POA, then it will cost anywhere from $50-150 per POA. 

If you need a POA or would like to set up your Estate Plan, you can contact us here for a free, quick consult. 

Just like buying life insurance, paying for Estate Planning services isn’t “fun” and you don’t get an immediate benefit (like buying a new phone). But think about this: You pay over $100 for sure on car insurance right? And you probably pay hundreds or even $1000+ per year on homeowner’s insurance. You might never get in an accident or need to make a homeowner’s claim, but you’ll for sure die one day. So, think of Estate Planning as a type of “insurance plan” that will for sure pay off one day (hopefully not too soon, though, right?). Get it done, and do yourself and your family a big favor.