A power of attorney is a legal contract in which one person (the principal) authorizes another person (the agent or attorney in fact) to act on their behalf. The principal may give the power of attorney to someone they trust, such as a relative or friend so that the agent can make decisions for the principal if they are unable to do so themselves.
This type of legal agreement gives you control over your own affairs when you’re unable to manage them and allows your chosen representative access to any documents you sign or receive from a third party. You can consider this document as an extension of yourself—it allows someone else full control over all financial and legal aspects of your life. The power of attorney can be drafted to take effect immediately or in can be drafted so that it only takes effect if something happens that renders you incapable of making decisions on your own behalf—such as an accident leaving one incapacitated with no immediate family members available who could assist them with day-to-day activities like grocery shopping; picking up prescriptions; paying bills, etc…
The authorization conferred by the power of attorney can be as limited or as broad as desired and can be structured so that it only becomes effective when certain events take place.
A power of attorney can be created for a specific purpose, a general purpose, or for all purposes. The power of attorney may be limited to one transaction or act.
- You are traveling for work and need to be present for the closing on the sale of your home, you can sign a power of attorney for the sole purpose of your friend acting on your behalf in relation to the sale of the home.
- You are about to travel to England to study abroad for a year, you can grant your parents a one year power of attorney so that they can handle any financial or legal matters that may arise at home.
Or, you may decide to grant your agent a broad grant of authority in your power of attorney. In such documents, there are very few, if any limits, on the type of actions that can be taken or the time when the agent may act. Broad power of attorneys are common between spouses or for an older parent to allow a child to act on their behalf as the parent ages.
Why do I need a Power of Attorney, can’t my spouse or my children already make these decisions for me?
If someone is a co-owner of a bank account with you, that person could assess the account and use the money for your support. However, their ability to act will on your behalf will be limited only to assets that they are a co-owner of. This means that while your trusted friend or family member could access your bank account, that same person would not be able to sell your residence, access your investments, file your taxes, or assist you in applying for government benefits.
A broad power of attorney will allow your agent to assist you in all financial and legal matters. This can include filing your taxes,
Oregon law provides that the agent only has authority to act on the principal’s behalf if the power of attorney is in writing, signed by the principal, and witnessed and notarized.
Oregon law provides that the agent only has authority to act on the principal’s behalf if the power of attorney is in writing and signed by the principal.
For example, if you need your agent to sell the property or sign a contract on your behalf while you’re away from home or traveling (for example, if you’re attending an out-of-town conference), then you should use a durable power of attorney.
When is power of attorney necessary or encouraged?
There are certain situations where you should actively seek out a power of attorney. For example, if you receive a medical diagnosis where you are alerted that you may have reduced decision-making abilities in the future, then you should pro-actively establish a power of attorney and choose someone who can take over decision responsibilities when needed.
This should also be considered if the person is going traveling for an extended period of time. If they’re not around, it’s important that someone else has authority over financial matters and other issues that arise while they’re away from home.
However, a power of attorney is a key part of any well-prepared estate plan. Having a valid power of attorney in place will avoid the need for a court-imposed guardianship or conservatorship if you are unable to managed or financial or legal affairs, because you will have already designated a third-party to act on your behalf.
Because a power of attorney allows another a broad range of power to make financial and legal decisions on your behalf, you should not sign a power of attorney that an individual, who is not your attorney, provides you. Instead, you should consult with an attorney to make sure that you understand the powers that you are granting to a third party and that you are choosing the right person to advocate for you.
If you have questions about a power of attorney or how to create a power of attorney, contact Kehoe Moneyhun Law, and we will be happy to assist you.