Powers Of Attorney: Giving Others Temporary Authority To Act For You
Introduction: Using Agents to Act for YouSometimes, we cannot act for ourselves. We may be delayed elsewhere, have conflicting commitments, or simply not feel well. In these cases, the law allows us to appoint someone else to act for us. This person, our "agent," has only the powers we give him or her. We remain the "principal"--the source of the powers--and may revoke either the authority as a whole or a specific action the agent takes that we do not approve. (This publication is intended as a general overview of powers of attorney, not as legal advice. You should consult an attorney if you have questions about how a power of attorney may work for you.)
Minnesota Statutory FormsDepending on the powers we wish to give, Minnesota has adopted several "statutory" forms we may use:
"Statutory" forms are those the legislature has drafted for us, and come with supporting statutes that include interpretations of key provisions and enforcement tools. Most of the statutory forms are entitled to "prima facie" enforcement, meaning that a third person can rely on the authority of the person presenting the form if it appears to be properly signed and notarized, without further investigation.
(There are two other kinds of agency documents commonly used by ordinary people: (1) Temporary Custodial Designations (Parental Powers of Attorney, in essence) and (2) Health Care Powers of Attorney (living wills, or health care directives). These are not with the scope of this guide.)
Financial Powers of AttorneyA financial power of attorney is used to appoint a person to handle some or all of your financial affairs for you.
You are called the "principal," and your agent is called your "attorney-in-fact". (Long ago, the word "attorney" simply meant an agent: the phrase "attorney-at-law" meant an agent in legal matters.)
Financial Powers of Attorney (POAs) come in two common forms: (1) generalized Powers of Attorney, and (2) limited Powers of Attorney.
Minnesota's statutory short form POA can be filled out to be either broad or limited in the powers it grants, and may be durable or have an expiration period.
Generalized Powers of AttorneyGeneralized POAs give the attorney-in-fact broad powers to act for the principal in a wide range of financial matters. Most POAs used in estate planning are generalized POAs, used to give the agent check-writing and bill-paying authority, plus authority to deal with a wide range of other financial matters.
Generalized Powers of Attorney can grant broad and sweeping powers to your agent. Generally, your attorney-in-fact will have the same authority to deal with your financial affairs as you yourself have.
Most generalized POAs use the "statutory" short-form format.
Most generalized POAs are also "durable," meaning the principal specifically consents to the continuation of the agent's authority during any period that the principal is incapacitated and can neither act for himself or supervise her agent.
Limited Powers of AttorneyLimited POAs give the attorney-in-fact only specific limited powers to act, usually in particular matters and often for a limited time period.
Limited POAs are commonly used at real estate closings when one of the buyers or sellers cannot be present. The absentee uses the POA to appoint someone to be present to sign for him/her. These POAs are limited to the single sale transaction and expire once it is completed.
Limited POAs can also be used for stock transfers. Nearly all stock companies now require use of their own form or a "Stock Power" signed at a financial institution, which stamps the form with a green "Medallion guarantee. Still, these are a form of limited power.
Limited POAs can also be used for other specific purposes, such as insurance transactions.
About the Statutory Short FormThe statutory short form POA can grant either generalized or limited powers, and may be durable or have an expiration period. The form is short: it will fit on 2 legal-sized sheets, or 3 standard 8-1/2 by 11 sheets.
Minnesota's statutory short form combines fill-in-the blanks and check-boxes. Each box has a short description of the power given; each description incorporates several paragraphs of statutes which define specific powers that are included. Checking only a particular box creates a limited POA granting only the listed powers. Checking "N" on a standard short form creates a generalized POA which grants broad and sweeping powers based on the statutory content.
You can further limit or expand the check-box authority by making the power durable, denying or allowing your agent to transfer your property to himself, and requiring or waiving the duty to account to you for what she has done. Consult a lawyer regarding the effects of these choices.
Enforcing a Statutory Short Form POABy law, a Minnesota statutory short form is prima facie valid---allowing it to be honored without further investigation--when properly signed and notarized.
Lately, a few national banks and large insurers have refused to honor statutory short form POAs that are over 6 months old, or have demanded that the customer use the institution's own forms. This is ILLEGAL. Minnesota law has no "freshness requirement" and institutions have no legal right to reject the statutory form in favor of their own.
If you run into problems using your statutory POA, contact a lawyer for assistance. You should also consider making a complaint to the Minnesota Attorney General.
Important: if you choose to use the bank form, remember it is only a LIMITED POA--it applies only to that bank and that specific account Do not rely on it for your financial or estate planning.
Common Law Powers of AttorneyThere are also "common law" powers of attorney. The common law power of attorney may sometimes be referred to as a "long form" power of attorney (because it spells out powers instead of referring to powers in the statutes), or as a "general" form (because usually the powers granted are very broad and general). Always use an attorney for these.
Common law powers of attorney are CUSTOMIZED documents which can add or subtract from the kinds of powers which appear in the statutory short form. Usually, they are drafted to (1) provide more powers to the attorney-in-fact in addition to the usual powers granted by the short form, or (2) deal with a particular situation unique to that principal's affairs.
Because the common law power of attorney is NOT the statutory short form, it is not entitled to the same "prima facie" enforcement. As such, the attorney-in-fact may run into situations where an institution refuses to honor it.
TERMINATION OF A POAWhile you are alive and competent, you have the right to revoke any POA you may have signed. However, it is important to let both the attorney-in-fact and any institutions where the POA is on file know that the POA is revoked. Consult a lawyer about the best way to do this.
All POAs terminate automatically on the death of the principal. The authority shifts to the personal representative (executor) of the estate. After your death, your attorney-in-fact has no further authority. This includes the authority to write posthumous checks. Checks written after a principal's death by the attorney-in-fact are invalid. Your attorney-in-fact does have a duty to give a final account to the PR (executor).
CONSULT A LAWYERAlthough the Minnesota statutory short form is widely available, and there are all sorts of "generic" forms available on the internet, you as a wise consumer should consult a lawyer to prepare and explain your POA. Most lawyers have modest fees for this, and a little advice up front may save your or your agent a world of trouble later.
COPYRIGHT 2010. Theresa K. Readio. All rights reserved.