The above title may seem to be hyperbole, however, the significance
and importance of a Power of Attorney is vastly understated. A Power of Attorney is one of the most
significant documents a person may ever sign, and contains provisions that are
What is a Power of
Attorney? A Power of
Attorney is a legal document, signed by a “Principal”, which authorizes a
second person, the “Attorney-In-Fact”, to perform certain actions on the
Principal’s behalf. The
Attorney-In-Fact does not have to be a licensed attorney, but is a person the
Principal trusts to act on his or her behalf.
Most Powers of Attorney signed today are “durable” which means that they
are effective immediately, and continue to be effective if the Principal
What powers does a
Power of Attorney delegate?
The Power of Attorney is a very customizable document, and can be as
comprehensive (or limited) as the Principal chooses. However, most Powers of Attorney provide the
Attorney-In-Fact with broad powers to conduct any transaction the Principal can
perform. The powers delegated are
virtually endless, including the powers to make gifts, loan money, sign
contracts, make withdrawals from deposit accounts, sign checks, and initiate or
defend a lawsuit. However, the
Attorney-In-Fact is required to only perform these duties as the Principal’s
fiduciary, and with the best interests of the Principal in mind.
Many Powers of Attorney also include the appointment of the
Attorney-In-Fact as the Health-Care Representative for the Principal as
well. This means that the
Attorney-In-Fact can make decisions regarding the Principal’s medical care and
treatment (if the Principal is unable to make those decisions for him or herself).
A third area where Power of Attorney can delegate significant powers
is child care. A properly drafted Power of Attorney can designate an
Attorney-In-Fact as the caregiver for minor children for up to one (1)
year. This provision would be very
useful if a parent and child have to be separated for an extensive length of
Why should I have
a Power of Attorney? A Power of
Attorney is extremely useful when a Principal cannot act on his or her own
behalf. The most common reasons this
occurs is because the Principal will be occupied with another task at the time
they are needed, or because the Principal is not competent to authorize such a
transaction on his own. If an unavailable
or incapacitated person does not have a Power of Attorney to assist them,
significant complications can result.
These complications could then require litigation and a court to appoint
a “Guardian” to act on the Principal’s behalf.
The costs of such a court appointment can be significant.
Who do I choose as
my Attorney-In-Fact? A Power of
Attorney grants significant power to the Attorney-In-Fact, and the Principal
should trust the person they appoint completely. For this reason, many people select their
spouse to serve as their Attorney-In-Fact.
Another option would be to appoint two (2) people to serve as
Attorney-In-Fact, but only allow them to act if they both authorize the
decision. The requirement that the
Attorneys-In-Fact act together would make it less likely that the
Attorneys-In-Fact will disregard the best interests of you, the Principal.
How do I create or
cancel a Power of Attorney?
A Power of Attorney is a legal document, and Indiana law requires that a Power of
Attorney be drafted by an attorney, and witnessed in front of a notary public
and at least one (1) witness. The
Attorney represents the Principal in such a transaction, and should discuss the
various uses of the document when it is created.
article was written by Paul C. Rudolph, an attorney with Rudolph, Fine, Porter
& Johnson, LLP in Evansville,
Indiana. For additional information, you can contact
Paul at (812)422-9444. Paul is also a licensed CPA, and his practice areas
include: State and Federal Taxation,
Estate Planning, Bankruptcy, and Corporate and Business Law.
article is intended solely as an information source, and its contents should
not be construed as legal or financial advice.
Readers should not act upon the information presented without qualified