How to Write a Power of Attorney

A power of attorney is a legal document granting a trusted individual the right and responsibility of caring for the assets and overall well-being of another person when they become incapacitated. While all power of attorney documents differ in their precise wording, there are some common provisions that you can use to guide your decisions.

Granting Authority

The first and most important provision in a power of attorney document grants the assigned person authority to act on your behalf. In general, this section will give the assigned person the right to act in the case of disability or legal incapacity. Typical examples of a disability prompting this provision include sudden strokes or degenerative diseases such as Alzheimer’s. In some cases, you may be unaware that you have reached a point of being too disabled to make your own decisions. When this happens, the court steps in and declares you legally incapacitated, triggering the power of attorney.

Powers Granted

While every power of attorney is drafted differently, there are some general trends in the powers that people grant in the power of attorney document. These examples include:

(1) Ability to collect and manage assets
(2) Buying and selling assets
(3) Borrowing money in your name
(4) Conducting regular business for you
(5) Filing your taxes
(6) Access to all safe deposit boxes
(7) Ability to appear in court on your behalf
(8) Ability to hire and fire agents such as attorneys and employees as necessary

Limits on Power

While it is unlikely that any person granted power of attorney would abuse their power, it is always prudent to place limits in the document to help them avoid any temptations. These limitations typically include:

(1) Execution of a will, codicil or will substitute
(2) Changing life insurance beneficiaries
(3) Making gifts on your behalf
(4) Removing property from a trust, causing it to become taxable
(5) Contriving a medical power of attorney

Substitute Agents

Another key component is to list at least two substitute agents in case the first agent is unable to serve. When listing agents, always include their full name and address. This gives the court a viable means of locating them.

Guardian

In case of severe incapacity, it may be necessary for a guardian to be named for you. A guardian is someone who lives with you and cares for your physical needs throughout the day. If you can, name two possible guardians and list their addresses. Remember that the guardian’s role is separate from the power of attorney’s role, so separate people should be named.

Additional Provisions

Additionally, you may also want to include specific terms for compensating the power of attorney agent. This ensures that agent clearly understands the amount they will receive for their time and effort.

If you had previously enacted any power of attorney documents, you must revoke them in this document. If possible, specifically list the previous documents by date so that any incidental remaining copies will be considered invalid.

Consulting an Attorney

Power of attorney documents are extremely complex to draft and often require provisions that you may not even realize are required. Each power of attorney authorization should be customized for the person for whom it is created; so, a generic power of attorney document may not be in your best interests. If you are considering drafting a power of attorney form, consult with an attorney.

Case Studies: Exploring Power of Attorney Provisions

Case Study 1: Granting Authority

Mr. Anderson, a senior citizen, becomes incapacitated due to a sudden stroke. His power of attorney document comes into effect, granting his assigned person the authority to make decisions on his behalf, ensuring his financial and personal affairs are properly managed.

Case Study 2: Powers Granted

Mrs. Ramirez appoints her daughter as her power of attorney agent. The document grants her daughter the power to collect and manage assets, handle financial transactions, file taxes, and make business decisions on her behalf. These powers help ensure that Mrs. Ramirez’s affairs are handled effectively and efficiently.

Case Study 3: Limits on Power

Mr. Peterson, in his power of attorney document, includes specific limitations to prevent potential misuse of power. These limitations restrict the agent from executing a will, changing life insurance beneficiaries, making gifts on his behalf, removing the property from a trust, or creating a medical power of attorney without his explicit consent.