Powers of Attorney

A Power of Attorney is simply a document that enables another person to act on behalf of the maker. The person creating the document is called the principal and the person carrying out the wishes of the principal is called the agent. The principal must be mentally competent when he or she signs the document, but the document may remain valid even if the maker becomes incapacitated. This continuing validity is known at law as durability. In Pennsylvania, all powers of attorney are durable unless the document specifies otherwise. This is why the term durable power of attorney is often used.

The law regarding powers of attorney was substantially revised in 1999. Since then, all new documents must carry a large NOTICE provision that warns the maker of the significant breadth and scope of the powers being granted to the agent. Additionally, in order for the power of attorney to be legally binding, the agent must sign an ACKNOWLEDGMENT. The agent affirms that he or she will act prudently, only in the best interests of the principal, keep good records and not commingle their money. Consequently, the selection of agent is CRITICAL.

A power of attorney becomes particularly important should the maker become incapacitated – whether this incapacity is short lived or of longer duration. Importantly, the agent may be empowered to make estate planning decisions - to minimize estate taxes and/or to take Medicaid planning steps. These steps may involve giving monies or assets to the principal’s heirs now, rather than at the principal’s death. In a power of attorney, this act is called gifting. Not surprisingly, gifting is sometimes abused by an agent. As a consequence, if gifting is to be permitted at all, since 1999 all powers of attorney must contain very specific language if you wish to grant gifting authority to your agent. For specific language and procedures, you should contact your elder law or estate planning attorney.

In essence, a power of attorney may grant the agent the power to do anything financially that the principal could do. Therefore, it is important to consider to what extent you wish to empower your agent. It might be appropriate to grant an agent limited, closely defined gifting authority or very far reaching powers. Your attorney can review these and other details with you as together you work on the creation of an appropriate document for your particular circumstances and needs. For example, you may wish to specifically authorize your agent to use your funds to consult with an attorney or other professional for legal, accounting or investment advice – all to better serve you as your agent.

A power of attorney may be effective immediately or only when a specific, future event has occurred. Such a triggering event might be when your doctor certifies that you are disabled either physically or mentally. This type of triggering mechanism is often called a springing clause. However, the need to certify a future event may cause a delay in the ability of your agent to act for you. Therefore, you should carefully consider the pros and cons of this feature.

To avoid or minimize family squabbles, you should consider advising your family of your plans for incapacity (power of attorney) as well as your estate. Additionally, it is much more efficient to have one agent rather than a group of agents. Obviously, some children might be disappointed to not be the one chosen to act. If you communicate with your children – particularly your chosen agent - during the planning process, you will be able to forestall many disputes.

Your signature (execution) of your power of attorney should be witnessed by two adults (not your family) and a Notary because this formality is required for some agent’s acts (for example a real estate transaction) and to improve the ready acceptance of your power of attorney document(s) in other states or countries.

Copies of your power of attorney can be as valid as the original. Additionally, a notarized power of attorney may be recorded (for a fee) in our County Recorder of Deeds Office or with the Clerk of the Orphans’ Court. Once recorded, certified copies may be purchased and are more readily accepted by financial institutions.