What Can I Do With A Power of Attorney?
A power of attorney is a legal document designating another person to act on your behalf in case you become incapacitated. It might seem straightforward, but Washington law imposes important rules that can make powers of attorney more complex than meets the eye.
"Magic Words" For Powers of AttorneyTo be valid in the first place, powers of attorney must follow certain formal requirements. The document must use the explicit term "power of attorney" and grant authority to an agent (i.e., the person to whom authority is granted) to act in the principal's (i.e., the person granting the authority) place. The principal's signature must be either notarized or witnessed by two unrelated persons who are not the principal's home health or similar caregivers.
When Does The Power Of Attorney Kick In?Unless otherwise provided, powers of attorney automatically take effect upon signing. They automatically terminate upon death, revocation or divorce, unless the document specifies another event that will end the power of attorney. Principals may detail specific circumstances (e.g., illness or incapacity) under which their power of attorney takes effect, and may even designate specific persons (e.g., a spouse or doctor) to determine when those circumstances are present.
Be Careful What Authority Your Power of Attorney GrantsPowers of attorney can grant broad powers to the agent by default simply by mentioning certain topics. That means a power of attorney can give much broader authority than you might expect from the ordinary meaning of its words.
For instance, powers of attorney mentioning real estate permit the agent to mortgage the property or remove buildings; references to financial institutions permit the agent to close accounts; references to businesses permit the agent to terminate the principal's ownership or fire employees.
Conversely, certain authority is presumed not to be granted to the agent unless the power of attorney explicitly provides as such. This includes important powers such as making gifts over the federal gift tax exclusion or making health care decisions.
The upshot is to carefully consider the specific powers granted in a power of attorney because they may be broader or narrower than appears at first blush.
Powers Of Attorney And Your WillA power of attorney can implicate the principal's will or other parts of their estate plan. Agents can often deviate from the principal's estate plan if the agent does not know about the estate plan, or if the agent concludes the estate plan is not consistent with the principal's best interest. This is especially important because the principal's would-be heirs generally can't sue the agent over changes to the principal's estate plan.
Powers Of Attorney And GuardianshipA power of attorney can automatically terminate if a court appoints a legal guardian for the principal, which might occur if someone petitions the court claiming the principal can no longer manage their own affairs. This might alarm principals who execute a power of attorney because they desire certainty as to who will manage their affairs should they become incapacitated. Principals can maintain some certainty by nominating a prospective guardian in their power of attorney. The court appointing a guardian must appoint the principal's nominee absent good cause.