My appreciation goes to S. Jane Patterson, Attorney for simplifying the definitions of powers of attorney and giving me permission to post this “handout” information that she provides her clients. Specializing in Elder Law, with an office in Gresham, Oregon, she can be contacted at her office: 503-667-5300.
A “Power of Attorney” names an “Agent” (“Attorney-in-Fact”) who is authorized to handle assets and financial transactions on behalf of the “Principal.” Usually the intention is that the Power of Attorney will be used only if the Principal is incapacitated, or asks that it be used.
“Durable” means that the Power of Attorney remains valid even if the Principal becomes incapacitated. However, it is only valid during the Principal’s lifetime, and it terminates on his/her death.
A “General” Power of Attorney gives the Agent very broad authority to act in many circumstances.
A “Special” or “Limited” Power of Attorney authorizes the Agent to deal with a specific matter or asset, such as the sale of a piece of real property, or to handle a bank account.
The Agent is not authorized to act outside the scope of the powers specified in the Power of Attorney. However, because most Powers of Attorney grant such broad powers, it is critical that the Agent be absolutely trustworthy.
Standard forms of Powers of Attorney do not include certain powers, which might be useful. For example, unless these are specified, the Agent is not authorized:
- To provide support to a spouse/partner, or to allow the spouse/partner to use funds for his/her own needs
- To make gifts on behalf of the Principal, including charitable gifts, tithes, birthday and Christmas gifts, or annual gifts to reduce the size of a potentially taxable estate
- To transfer assets into a spouse’s/partner’s name, if necessary for planning purposes
- To create or amend Trusts, change beneficiary designations, or disclaim assets (an Agent cannot modify a Will)
- To nominate Guardians, Conservators or other fiduciaries
The Principal retains control of income and assets, and can revoke the Power of Attorney.
The Principal does not retain control when a Conservator is appointed by the court to manage the financial affairs of the Principal.
“When you tell the truth, you never have to worry about your lousy memory”