The Power of a Power of Attorney – Don’t wait until it’s too late

Here’s another edition of the Power of Attorney saga for everyone. Timing is everything. We’ve all heard this before. A farmer needs to know when it’s time to plant and when it’s time to harvest. An investor needs to know when it’s time to buy and when it’s time to sell. A husband needs to know when his unsolicited advice might be well received and when it’s time to simply keep those little gems to himself. And a Principal needs to know when it’s the right time to give a grant of authority to their Agent by executing a power of attorney.

I’ll give you a hint, if someone other than the Principal is seeking a power of attorney for that individual, it might just be too late.

A power of attorney gives one or more persons – known as Agents – the power to act on your behalf. The power may be limited to a particular activity, such as standing in for you to sign a contract, or be general in its application. And the power may give temporary or permanent authority to act on your behalf.

The key here is to have a power of attorney created before you need it. Why, you might ask…?Because you, as the Principal, have to have the requisite capacity in order to grant it.

I can’t tell you how many times I’ve been contacted by someone saying something like, “Mom or Dad can’t make decisions anymore so I’m going to need to get a power of attorney for them.” Guess what – it’s too late at that point.

The power of attorney is not what someone gets for you, it’s something you grant someone else. And no attorney worth her salt is going to risk her license to practice law on a roll of the dice of that sort. Additionally, putting a paper in front of mom or dad to get their signature isn’t a very good idea either.

An Agent is a fiduciary and has a higher standard of care where the Principal is concerned. Bad acts against the Principal are actionable and one can get in some serious trouble by trying to get mom or dad to sign off on something they don’t have the capacity to understand.

The type of capacity required to sign off on these documents is what we call “contractual capacity.” To determine this, courts look to see that the Principal demonstrates more than a “transient surge of lucidity” at the moment they sign a document of this nature. They need not merely comprehend what is going on, but they have to have the ability to comprehend the nature and quality of the transaction along with its significance and its consequences. This is the test for this type of transaction and if the Principal lacks this capacity, they would not be able to legally grant powers of attorney to another.

I can’t stress how serious these documents are. And how important it is to have them in place so they are available when they’re needed. Any good estate plan will also come with powers of attorney, both for health care and for finances. Make sure you’re prepared. The present moment is all you have so use the power of NOW to make sure it’s not too late. If I can help, I’m here for you now.