POWERS OF ATTORNEY
Powers of attorney are believed to have
originated in England during the time of the Crusades. Because a
knight would be away from his home and property for long periods with
little or no communication with those who remained behind, it became
necessary for him to designate someone who would have the power to act for
him with respect to his property during his absence. As
communication and travel became easier and faster, the primary purpose of
powers of attorney changed to providing a mechanism for dealing with and
managing a person's property if and when he was not able to do so himself
because of physical or mental disability. The problem, however, is
that according to the English common law a power of attorney is
automatically terminated or revoked when the person granting the power
becomes disabled.
Recognizing that most persons who grant powers
of attorney do so anticipating that the power will be effective upon their
disability many states (including Arizona) have made statutory provision
for "durable" powers of attorney. In Arizona a durable power of
attorney should provide that "this power of attorney shall not be affected
by the disability of the principal" or "this power of attorney shall
become effective only upon the disability of the principal." Of
these two forms, the second is sometimes known as a "springing" power.
The power of attorney should be drafted to provide some objective standard
of disability, such as proper certification by an adult child and the
family physician.
Powers of attorney, whether durable or not,
can be either "general" or "special." With a general power of
attorney, the owner of property, called the principal, grants to someone
else, called the attorney‑in‑fact, complete legal power to act for the
principal with respect to his property. Such a power would empower
the attorney‑in‑fact to collect funds, cash checks, draw on bank accounts,
manage and sell real property, sell securities and reinvest, pay bills,
and generally expend funds for the benefit of the principal. The
obvious danger is that the attorney‑in‑fact can wrongfully use the power
for his own benefit. It is important, therefore, to give a general
power of attorney only to a completely trustworthy person, or, perhaps, to
give a joint power to two persons so that one can check on the other.
A special, or limited, power of attorney is
less dangerous because it gives the attorney‑in‑fact the power only to
deal with assets in a restricted way or only to deal with certain assets.
For example, the power of attorney might give the attorney‑in‑fact the
power to write checks only on a specified bank account, the power to sell
only a specified stock or piece of real property, or the power only to
transfer assets to a trust created by the principal. Banks and many
stock brokers have their own forms of limited powers of attorney for use
at such bank and brokerage house; so, if the power is to be limited to
dealings at a specific bank or stock broker, it is probably easier to use
their procedures.
ALL POWERS OF ATTORNEY IN
ARIZONA ARE
AUTOMATICALLY TERMINATED OR REVOKED
UPON THE DEATH OF THE PRINCIPAL
Establishing joint tenancies usually gives
either joint tenant the power to deal with the property, so a power of
attorney may not be necessary if one of the joint tenants becomes
disabled. If, however, the property is real estate, each joint
tenant must sign, and costly delays in dealing with such property may
result if one joint tenant becomes disabled. If a person becomes
disabled without providing some mechanism for someone else to manage and
deal with his property, such as a living trust or a power of attorney, a
conservator must be appointed by the court, which involves a not
inexpensive legal determination that the person is incompetent. The
conservator must post a bond, again not inexpensive, and account annually
to the court. Trustees and attorneys‑in‑fact are not required to
post a bond or report to any court.
Formerly powers of attorney applied only to
property. Recent changes in the law now make it possible to legally
empower another to make decisions regarding his/her person. For
example, a person can now give someone else the power to consent to
his/her medical treatment. Most hospitals and health care providers
recognize "medical powers of attorney" which give someone else the power
to give or refuse consent to medical treatment.
Arizona law changed a few years ago to require
that certain powers of attorney be witnessed. An acknowledgement is
sometimes necessary. Also, certain provisions in certain powers of
attorney must be witnessed. Many old forms still abound, leaving
those who do-it-themselves at great risk. Use a pre-printed form
with great caution and only if you are willing to accept the risk that the
form may not be valid or effective.
As a result of the Health Insurance
Portability and Accountability Act, many health care providers are no
longer recognizing powers of attorney that do not contain a specific
reference to HIPAA, or do not contain specific HIPAA language. Thus,
many older powers of attorney may no longer be useful. Powers of
attorney that were prepared before HIPAA should be reviewed to determine
if they are still effective.
For
probate assistance in Arizona, call us at 928/445-3230 or
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