Power of Attorney Definition
Power of attorney refers to a legal document that allows an agent to conduct transactions on behalf of a principal. General power of attorney allows an agent to conduct transactions in nearly all aspects of a principal's life, including accessing bank accounts, paying bills, initiating and responding to lawsuits and executing the terms of contracts to which the principal is a party. Limited power of attorney refers to latitude granted by the principal to the agent for a specific purpose, for instance, handling the sale of a house. Once that specific transaction is completed, the power of attorney expires.
Mental Competence Defined
Mental competence is defined as the ability to understand the terms of a contract and the capacity to enter into an agreement. Mental competence can be temporarily compromised, for instance, by intoxication. Permanent mental incompetence can result from severe head or brain injury, mental illness, retardation or a degenerative mental condition such as dementia. The law does not allow a principal who is mentally incompetent to designate power of attorney. A mentally incompetent principal is also prohibited from revoking a power of attorney that was properly drawn up. In fact, a durable power of attorney is designed to allow an agent to act in place of a principal who becomes incompetent, either due to illness, injury or some other reason.
Revoking Power of Attorney
A mentally competent principal does not give up the right to handle her own legal affairs. She may elect to act on her own behalf even with a power of attorney in place. A principal may revoke power of attorney at any time, including durable power of attorney, as long as she remains mentally competent. A principal may also regain the legal right to revoke power of attorney after a period of mental incompetence by demonstrating she has regained the capacity to handle her own legal affairs.
Establishing Mental Incompetency
If the principal chooses, she may designate the conditions under which she may be declared mentally incompetent as one aspect of a durable power of attorney. Even without such a designation, many courts will require a physician to submit a written determination that a principal is mentally incompetent. The physician will probably consider three areas before making a determination: whether a principal understands the terms of the power of attorney in question, whether she understands the seriousness of making such an agreement and whether she can reasonably communicate her wishes.