Power of Attorney During Cancer Treatment
What is a Power of Attorney?
The Power of Attorney is the financial compliment to the advanced medical directive. The power of attorney (“POA”) allows a person to appoint another person to act in their stead to make certain decisions. In fact, an advanced medical directive is sometimes referred to as a “healthcare power of attorney.” But, most people use the term “power of attorney” to mean dealing with financial issues.
The mechanics of a POA are very simple. A person, called the principal, creates a legal document giving someone, called the agent or attorney-in-fact, powers to act in the principal’s place. The powers conferred can be extremely diverse, from only dealing with one issue to spanning all the normal financial powers the principal can have. The agent is in a fiduciary relationship with the principal. The law requires the agent to act in the best interests of the principal. The agent must also be completely honest with and loyal to the principal in their dealings with each other.
Power of Attorney vs. Durable Power of Attorney
There are two basic forms of POAs that govern financial decisions.
- Power of Attorney (“POA”): With a regular power of attorney, the powers vested in the agent by the principal are revoked if the principal becomes incapacitated, incompetent or dies. This makes a regular power of attorney restricted if the principle is facing a debilitating disease.
- Durable Power of Attorney (“DPOA”): A durable power of attorney is effective from the moment of execution and may supersede the principle’s death if elected. A DPOA will also be in effect when the principal becomes incapacitated. A DPOA can also become effective when the principal becomes incapacitated, but the DPOA must expressly state that requirement. This is sometimes known as a “springing” power of attorney.
Do I need an attorney to complete my Power of Attorney?
As with the Advanced Medical Directive previously discussed, examples may exist that allow you to execute a POA without an attorney. If you can afford an attorney, we strongly encourage using one. These documents provide the keys to your financial house. Most states have guidelines and examples with respect to POA and DPOA (ie., Texas and Virginia).
Restrictions on Power of Attorney
A principal can provide a number of powers to an agent. Each state has individual restrictions a principal can confer but an agent’s powers may include any of the following:
- Buy, manage, or sell real estate
- Disclaim interests to avoid estate taxes
- Employ professional assistance
- Enter into contracts
- Enter safety deposit boxes
- Exercise stock rights
- File tax returns
- Handle banking transactions
- Handle matters related to government benefits
- Handle transactions involving securities
- Maintain and operate business interests
- Make gifts
- Make transfers to revocable trusts
- Purchase life insurance
- Settle claims
Since an agent’s powers could be vast, a principal should be careful in selecting an agent. If necessary, the principal should include any desired restrictive clauses in the power of attorney document.
It is important to recognize the value of being able to assign these decision making capabilities to a trusted family member or friend, especially in the case of durable powers of attorney that continue to be legally binding in cases of incapacity. These documents can save care-giving family members and friends a great deal of time, frustration and money.