Are All Powers of Attorney Created Equal?

An audience member at one of our recent presentations about advance health care directives suggested that people should make powers of attorney and advance health care directives when they reach 50 years old or older. We responded that most people over 18 years of age should make powers of attorney and health care planning documents because of health crises do not discriminate between young people and old people. Naturally, however, the planning needs of an unmarried 18-year-old probably differ sharply from a 70-year-old married couple with grandchildren. This article describes some of those differing needs, and explains how powers of attorney and health care planning documents help satisfy those needs.

Every adult has a constitutional right to own and control property without interference by others. State and federal laws protect that right by restricting prohibiting financial institutions from giving an account owner's financial information to unauthorized third parties. Laws prevent strangers from selling a person's real estate, motor vehicle, or other significant assets, or offering them as loan collateral without the owner's approval or authority. Unfortunately, if a person becomes injured or too sick to pay bills or conduct other business, the person statutory and constitutional rights can prevent family and friends from helping the disabled person conduct business. If the person has not given someone a power of attorney, the person's personal business will languish until someone petitions the court for guardianship and the judge appoints a guardian to take control of the situation.

A person (referred to in this context as the "principal") can make a power of attorney to share his or her authority with others to conduct his or her personal business. Spouses often give each other powers of attorney that take effect immediately so that each can represent the other in personal business without restriction. Alternatively, a "springing" power of attorney only takes effect when the person's physician gives a written opinion that the person is too disabled to manage his or her personal business to prevent a well-meaning power of attorney holder (known as the "attorney-in-fact") from interfering with the person's business while the person is healthy.

Most powers of attorney only expire upon their principals' deaths and are "durable," which means that they continue to function after their principals become disabled. Other powers of attorney may expire on specific dates (such as the expiration date of a contract) or after specified triggering events (such as release from prison or return from military service deployment).

Powers of attorney usually only deal with financial and personal business matters, but they can also include powers to make health care decisions. If a principal wants to authorize an attorney in fact to make business decisions health care decisions, the principal can include both kinds of powers in a single power of attorney document. However, a principal may want to limit an attorney-in-fact to only make business decisions with a limited power of attorney that excludes health care powers, and appoint a health care representative separately through a health care power of attorney or an appointment of health care representative.

Other power of attorney variations exist, such as the tax-motivated versus health care-motivated drafting choices that we described in our recent blog article posted at http://hawkinslaw.com/puny-powers-of-attorney/. We maintain the emphasis that we stated in that article that a lawyer should not create all powers of attorney alike; because the lawyer must consider carefully which power of attorney provisions best satisfy each client's specific needs and goals. A "One-size-fits-all" power of attorney is often just as useless as a "one-size-fits-all" shoe, dress, or business suit unless its random design happens to fit a principal's individual needs and goals by mere happenstance. Proper estate planning features deliberate document design by an expert estate planning attorney -- not dumb luck, happenstance, or online purchase by a novice.

Jeff R. Hawkins and Jennifer J. Hawkins are Trust & Estate Specialty Board Certified Indiana Trust & Estate Lawyers and Jeff is a Fellow of the American College of Trust and Estate Counsel. Both lawyers are admitted to practice law in Indiana, and Jeff Hawkins is admitted to practice law in Illinois. Jeff is also a registered civil mediator and was the 2014-15 President of the Indiana State Bar Association.