Powers of Attorney

Powers of attorney create a unique legal relationship between the creator of the power, known as the “Principal” and individuals granted the power, known as “agents.” The powers granted by a power of attorney vary in type and scope, depending on range of authority the principal intends to create. In essence, a power of attorney gives an agent the ability to “step into the shoes” of the principal for purposes of making financial and/or healthcare decisions. The agent is under strict duties and obligations when acting under the authority of a power of attorney, and the authority is not limitless. The following discusses the two most common types of powers of attorney: Durable Power of Attorney for Finances and the Power of Attorney for Healthcare.

Durable Power of Attorney for Finances

A durable power of attorney for finances allows an agent to essentially sign their name on any legally operative document that would originally require the signature of the principal. This can include anything from a simple check to the electricity company, to the sale of land or the amendment of an estate plan. For this reason, it is essential to select well-trusted agents that will be respectful and prudent with the authority granted under the Power of Attorney.

In many instances, clients will opt for a broad-scope power of attorney to help alleviate any and all problems in the future with signing documents. However, it is sometimes necessary to execute a limited-scope power of attorney for a singular transaction. The breadth of the document will depend upon the principal’s intent at the time of execution.

Anyone serving as an agent under a power of attorney is under a strict due to act with prudence and loyalty to the principal. If the principal is still within proper mental capacity, the agent may only at the express direction of the principal. If the principal has reached a point of mental incapacity, the agent is tasked with acting at all times in the best interests of the principal — even if the principal is directing the agent to do something different.

In the event an agent mishandles funds or intentionally engages in wrongdoing using the power of attorney, there will be severe consequences both civilly and even criminally. Powers of attorney are not to be taken lightly, and agents are best to exercise caution when engaging in financial and legal transactions.

Advance Healthcare Directive

In Delaware, the power to make healthcare decisions may be conferred upon an agent by using a document known as an Advance Healthcare Directive. This document is actually two documents in one, and creates both a healthcare power of attorney and a living will.

The healthcare power of attorney is a legal relationship wherein the creator of the power (the Principal) confers upon another person the authority to make healthcare decisions in their stead. These healthcare decisions need not necessarily pertain to a terminal illness or deathbed scenario. By contrast, the healthcare power of attorney is enforceable in any event where the principal is no longer able to effective advocate for himself/herself, due to mental incapacity, debilitating pain or sedation (for example).

A living will is a separate concept in which the principal is able to make decisions as to how his or her body will be treated at the end of life. Many people feel very strongly about how they would like to be treated once considered to be terminal, and the living creates an ironclad agreement between the principal, agent, and healthcare providers that ensures those wishes will be honored. Once the living will is execute, and the principal’s wishes are memorialized, the healthcare agent is bound by those wishes — even if the agent believes another course of treatment is better. Moreover, if the principal is still able to effectively advocate for himself/herself while facing a terminal diagnosis, he or she can override the language of the living will and elect something different.

Healthcare directives may also address certain end-of-life wishes involving religious ceremony, physical treatment of the body, number or frequency of visitors, etc. Subject to limited exceptions, healthcare wishes can be drafted virtually any way deemed appropriate by the principal.

Skipping over these documents?

One common question from clients is whether these power of attorney documents are really necessary, which is always met with a resounding “Yes!” Powers of attorney become extremely necessary in the event of a diagnosis of dementia or similar mental incapacitation, as the principal will be no longer able to make any decisions for himself/herself. If this happens, and there are no powers of attorney in place to grant certain authority to agents, it may be necessary to petition the Court of Chancery for an adult guardianship — which is a costly and time-consuming exercise that could have been easily avoidable with the execution of a full estate plan.