What is a Healthcare Power of Attorney?

A power of attorney is a way of giving authority to another person or people. There are two basic types: (1) a limited power of attorney (also called a special power of attorney) and (2) a general power of attorney. Laws that govern powers of attorney are state-specific and this guide is based on Virginia law. A power of attorney is a straightforward and flexible component of most estate plans and having one saves a great deal of stress and money. The law behind a power of attorney is detailed and this guide is not a substitute for consulting with an attorney whose practice focus relates to laws that control drafting and enforcement of a power of attorney.

The power of attorney is not the same as a medical power of attorney (called an advance medical directive or living will in Virginia). Instead, it deals with property and assets that a person owns and benefits to which a person may be entitled. If written correctly, it can also be used to deal with matters related to a house or land. Properly drafted POAs can last for many years and can be used to avoid a guardianship proceeding which is necessary if someone is over 18 but incapacitated (this does not mean physical incapacity – it means that they do not know what it means to take an action or not take an action). Incapacity can be temporary or permanent.

A durable power of attorney is one that works even when the person who created it is incapacitated. If a power of attorney is not durable or if it is incorrectly written, this will not work, which means that the only option for paying someone’s bills or protecting their property is a guardianship petition. Using a power of attorney form is not recommended because a form or a power of attorney template is often not enforceable.

Virginia and other states have adopted uniform power of attorney statutes. This means that even though there is no single general power of attorney that works in all states there are now common elements recognized across jurisdictions. An estate planning lawyer can tell you if an existing POA is valid or enforceable. Sometimes, laws called reciprocity statutes allow for a power of attorney document that was executed in another state to be used for some or all purposes.

Many people think that being a spouse or a family member gives them the ability to help with someone’s bills and finances if they become ill or injured. This belief is incorrect. Without a power of attorney, even a person’s husband or wife cannot so much as deal with a utility company, much less deal with things related to medical expenses or property. Although laws prefer certain persons such as a spouse or children if someone becomes incapacitated, the only way to avoid going to court is to have a well-drafted POA in place before someone needs to use it.

Elements – Power of Attorney Virginia

Several of the elements of the power attorney form in Virginia are similar to the rules in other states. A person who creates a power of attorney is called a grantor. The person who acts under the power of attorney is called an attorney-in-fact or agent. Another term for the attorney in fact (AIF) is fiduciary. There can be more than one AIF and they can act unanimously or separately. It is also possible to name an entity as an attorney in fact, although this is usually done only with a limited power of attorney. As with other basic estate planning documents (like a will or advance medical directive) a POA can name a substitute agent or agents.

In order to create a power of attorney a person has to be over the age of 18. They have to have capacity, which means the ability to manage their own affairs and to understand how to act in their best interests. Adults are presumed to have capacity unless an illness, injury or conditions related to advanced age (such as dementia) diminishes or causes them to lose capacity. If a person begins to lose capacity or if there is a question about their capacity it is often not possible to create a valid and enforceable power of attorney, which means that nothing can be done without going to court.

A valid grant of power of attorney could be something as simple as, “I Susan give John the ability to do on my behalf anything I could do if acting on my own.” As with anything, the potentials for error are in the details and over time there has also been a trend of people or entities refusing to act or delaying an action when asked to taken an action under an existing POA. Although attorneys can win these arguments, the point is to not have an argument to begin with because asking a court to resolve these kinds of matters is expensive, slow, and costs money. Therefore a kind of competition between those required to act and people writing a general power of attorney has developed.

In response to these problems, estate planning attorneys have begun to enumerate specific actions that may be taken within the power of attorney. Even though the law says that a power of attorney that says an attorney-in-fact may take any action the grantor could do, the reaction of many banks and government offices is that no, you can’t do that because the power of attorney doesn’t say you can. This may be understandable for two reasons. First, the easiest answer to any request is usually no or sometimes no answer at all! Second, companies and their insurance carriers are very concerned about being sued. They reason that if someone presents a do-it-yourself power of attorney or a power of attorney form, it may be fraudulent.

To address this problem, a modern power of attorney prepared by a capable attorney will list specific powers by type, as well as include the general “any act I could do myself” language. Take opening a bank account for example. One of the listed powers among many says “to open a bank account”. In this way a person can have confidence that the power of attorney can actually be used when it is needed. One other way to ensure that third parties will act is to write the power of attorney in such a way that the third party (the bank clerk or manager, or an insurance agent, for example) becomes liable for failing or refusing to act when such failure or refusal causes harm or other losses.

Although estate planners frequently recommend a general power of attorney (that is to say, one that is as broad as possible), they are not without risks. Restricting powers is advisable in some situations, however, because none of us can see the future, these restrictions should be imposed with care. An example of a restriction that might be necessary and desirable would be a circumstance where someone has already or might someday inherit family land. The power of attorney could say that the attorney(s) in fact have the ability to deal with real estate, including the ability to contract for the sale, lease or purchase of real estate. It might also say that the power is limited in that if it is possible to retain ownership of the family land this should be done (perhaps with an eye toward preserving the land so that it may be conveyed in a last will and testament after the grantor’s death). It is also possible to place limitations that are practical and do not unduly restrict the action of an attorney in fact. Keeping with the same example of family land, the person writing the power of attorney could require an agent or attorney in fact to consult with his or her cousins before selling an interest in the family land. There can even be more specific instructions depending on the circumstances, including the formula for determining a sales price and the terms and timing upon which the land shall be offered.

Any action taken under a power of attorney can only be done legally if it is in accordance with the grantor’s wishes and in the best interest of the grantor. A power of attorney can make gifts of property in certain circumstances (often to achieve the goals of a last will and testament during a final illness). Often these gifts of property or money are done to prevent assets from being wasted or lost to nursing care costs. There are very specific laws and regulations about these kinds of transfers with steep financial penalties for violations. An attorney should be consulted before making transfers for no value or for compensation below an asset’s market value.