What is a power of attorney?

A power of attorney is a written document that gives another person authority to act on your behalf.  For this discussion we’ll call this person your “agent”.  This authority can be very general, or very limited.   A “general” power of attorney gives the agent wide-ranging powers including: the ability to sign checks and transfer money in and out of bank accounts, buy and sell property, file your taxes, manage insurance policies, provide for your spouse and children, among many others.

However, these powers can be limited by the document.  For example, some years ago my wife and I sold our house.  My wife was not able to attend the closing, due to work obligations.  Rather than try to reschedule the closing, she signed a power of attorney which only gave me the power to sign the necessary papers in her name.  This is not unusual, and allowed us to proceed with the sale of the house (and the new owners were able to move in) without delay.

Can I still make decisions?

Yes.  Signing a power of attorney does not reduce your ability to make decisions for yourself.  You are sharing the ability to handle your affairs with your agent, and your agent cannot ever overrule your decisions, unless you have been pronounced incompetent by a medical professional.

When does the power end?

Unless the document says otherwise, the power of attorney becomes ineffective when you become incapacitated or at your death.  If the document is a “durable” power of attorney, the agent keeps his power when you become incapacitated.  This incapacity could be due to an illness, accident, or disability.  In such a case, your agent would be able to continue looking after your affairs during the time you are unable to speak for yourself or make good decisions.

This makes a durable power of attorney a very powerful and useful document in your estate plan.  If you are in an accident and unable to make decisions for some period of time, this document would allow someone to continue to pay your bills, make claims on your insurance, and keep your life in order until you’re able to start making decisions for yourself again.

Finally, you can revoke your power of attorney at any time.  The law allows you to revoke the power orally, but it is always better to put such things in writing.  This can be done by giving the written statement to your agent, and it’s a good idea to give copies to your bank, insurance agent, landlord, and anybody else who may have dealings with your agent.

What happens at my death?

Your power of attorney stops working at the moment of your death.  Your agent no longer has the power to act on your behalf, and it is up to the executor of your estate to manage your assets until your property is distributed according to your will.  The person acting as your agent can be the same person you nominate to be your executor, however.

Who should be my agent?

The person you nominate as your agent must be someone you can trust with your finances and responsibilities.  Tennessee has statutes that require this person to act in your best interest and keep records of what they have done.  Your agent needs to not only be someone you can trust, but someone who can keep accurate records and will have adequate time to handle your affairs responsibly.

Are there other types of powers of attorney?

Another document, called a “durable power of attorney for health care” allows another person to make medical decisions for you while you’re incapacitated.  This is a separate document from the “general” power of attorney, and it has slightly different requirements.

An agent acting under a power of attorney for health care can authorize and refuse medical treatment for you, which can be of great benefit in emergency situations.  This document, along with a Living Will, gives you the power to decide what will happen if you are in a persistent vegetative state or are so injured that it takes heroic measures to keep you alive.

What other alternatives are there?

One alternative is a conservatorship.  This is a more drastic measure requiring the intervention of a probate court.  However, in some cases a conservatorship may be a more desirable option.  Click here to learn more.