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What is a Power of Attorney?

what is a power of attorney

A power of attorney is a written instrument that enables a person or an organization (the “principal”) to delegate to someone trustworthy (the “agent” or “attorney-in-fact”) the authority to do certain things on the principal’s behalf, such as manage property or make decisions relating to healthcare. For instance, a business might assign power of attorney to a law firm, authorizing the firm to handle the filing of patents and other intellectual property matters on its behalf.

An agent need not be a lawyer and need not have any particular expertise. In fact, powers of attorney are often granted between family members or close friends as a means of preparing for end-of-life care. In this context, an agent’s authority may range from making decisions regarding real or personal property to selecting a course of medical treatment, providing meals, or hiring household employees.

The law provides for flexibility in tailoring a power of attorney to the principal’s needs. A principal may either authorize an agent to do specific tasks, such as file his or her tax returns, or handle ongoing tasks, such as manage investments. A principal may draft a “durable” power of attorney designed to remain in place even if the principal loses his or her mental acuity, or a non-durable power of attorney. In addition, a principal may draft a “springing” power of attorney, which, by its terms, does not become effective until a specified future time or until the occurrence of a specified future event or contingency, including but not limited to the subsequent mental incapacity of the principal. A springing power of attorney may be durable or non-durable.

The range of powers that may be delegated to an agent through a power of attorney are broad, but not unlimited. For example, a principal may permit an agent to establish a trust in his or her name, but the law prevents the agent from making or changing the principal’s will. Likewise, there are restrictions on the ability of the agent to make gifts to him or herself from the principal’s estate.

Where a power of attorney is used for estate planning purposes, it is especially important to plan ahead. A power of attorney may only be executed by someone who is mentally competent. Specifically, in the context of “advance healthcare directives” (which may include either individual healthcare instructions or a power of attorney for healthcare), Probate Code section 4609 provides that the principal must have the ability to understand the nature and consequences of a decision and to make and communicate a decision, including, in the case of proposed healthcare, the ability to understand its significant benefits, risks, and alternatives.

The law is less clear regarding the degree of mental capacity needed to modify or revoke an advance healthcare directive. At least one California court addressed the issue in a case involving Sumner Redstone, a 95-year-old businessman and media magnate. Mr. Redstone had given an advance healthcare directive to his former girlfriend, Ms. Herzer, only to revoke the power a month later. Ms. Herzer argued that Mr. Redstone was not competent to revoke the power. The judge found that although Mr. Redstone’s speech was impaired and his mental acuity diminished, Mr. Redstone was unmistakably firm in his distrust of Ms. Herzer and desire to revoke the power of attorney. The court held that in determining the degree of mental capacity needed to revoke a healthcare directive, the lower level of capacity necessary to make a decision to marry or divorce was all that was required, since trust between the parties was the underlying concern in the context of marriage/divorce, as well as in the exercise of healthcare directives.

For help drafting a power of attorney, please contact one of our experienced attorneys at Bremer Whyte Brown & O’Meara for a consult.