Power of Attorney Definition
A power of attorney is created when one person, known as the principal, authorizes another person, known as the attorney-in-fact, to perform legal acts that could otherwise be performed only by the principal. Such acts may include consenting to medical treatment, paying bills on behalf of the principal or filing the principal's tax returns. The attorney-in-fact does not have to be an attorney. Critically ill people who anticipate becoming unable to manage their own affairs often execute powers of attorney. A power of attorney must be in writing for validity.
The UPOAA clarifies duties and liabilities of attorneys-in-fact that were left unclear in the older Uniform Durable Power of Attorney Act. In view of the reality that powers of attorney are often executed among family members, the UPOAA allows the attorney-in-fact to gain financially from his administration of the principal's affairs, as long as he acts diligently and competently in the best interests of the principal. His acts are subject to the judicial review of state courts, which may remove him for misconduct. If the attorney-in-fact wishes to resign and the principal is unconscious or mentally incompetent, the agent may submit his resignation to certain designated parties including a government agency responsible for the principal's well-being, for example, the Veterans Administration Hospital.
Protection of the Principal
A power of attorney may use either vague or specific language when outlining the authority of the attorney-in-fact. The UPOAA, however, requires the power of attorney to use specific language to grant the attorney-in-fact certain powers, such as the authority to make gifts out of the principal's assets or the authority to change the beneficiaries of the principal's will. The UPOAA contains alternative provisions concerning the specificity required for granting certain powers. These provisions allow individual states to choose which alternative to adopt.
Third Party Obligations
The UPOAA outlines circumstances in which a third party is entitled to refuse to honor a power of attorney, as well as certain duties that arise from such a refusal. A physician who refuses to honor a power of attorney, for example, must cooperate with the orderly transfer of the principal to another medical facility if the attorney-in-fact so demands, and must arrange for the transfer of medial records. Although under certain circumstances a third party may be held liable for refusing to honor a valid power of attorney, a third party may refuse to honor a power of attorney if honoring it would subject the principal to physical abuse, financial abuse or certain other harms.