What is a Power of Attorney?

A Power of Attorney is a written document that allows you (the “principal”) to appoint another person  (the “agent”) to act on your behalf.   A principal may give the agent powers that are very broad or very narrow and specific.    A General Power of Attorney grants broad powers to the agent usually only limited by law.  An agent with a General Power of Attorney would be able to do almost anything that you could do for yourself such as buying and selling property, managing assets, entering contracts on your behalf, etc.  While a General Power of Attorney may also grant some authority to make health care decisions for the principal it is more common to see a separate Health Care Power of Attorney or Advance Medical Directive dealing with these issues.  On the opposite end of the spectrum from a General Power of Attorney is the Limited Power of Attorney.  A Limited Power of Attorney sets limits on the agent’s authority to act and these limits may be as specific or general as the principal wishes.  In other words, a Limited Power of Attorney may be used to grant a person the authority to act on your behalf solely for the purpose of selling your car for you.  Outside of the particular transaction involving the sale of your car the person would not have any authority to act on your behalf.

A regular power of attorney is rendered ineffective when the principal becomes incapable of handling his/her own affairs.  A Durable Power of Attorney is required if the agent’s powers are to continue after such an event occurs.  Whether or not a Power of Attorney is “Durable” depends upon the specific language used in the document and its compliance with state law.

If a person does not want to execute a Durable Power of Attorney while they are still capable of handling their own affairs then they may want to consider a “Springing Power of Attorney”.   A Springing Power of Attorney contains language stating that the Power of Attorney will not go into effect until a specific time in the future or after a set of preconditions are satisfied, such as the principal becoming mentally incapacitated.

Before you execute a Power of Attorney it is important that you understand that even though your agent must follow certain legal rules in Virginia as a “fiduciary,” there is no formal oversight of the agent. You must fully trust the person the person who will act as your agent.  If there is no one you fully trust to act as your agent, then a Power of Attorney is not recommended.


Power of Attorney FAQs

1.  Why should I sign a power of attorney?

A durable general power of attorney could be very useful to you if you ever become temporarily or permanently incapacitated and unable to handle some or all of your business and personal affairs. Your agent could step in and take care of your affairs for you without delay.

Having a power of attorney may avoid the need for a guardianship. If you become incapacitated and have not signed a power of attorney, someone may be forced to petition the Circuit Court to have a guardian and/or conservator appointed for you.  A guardianship and/or conservatorship proceeding can be an expensive, unpleasant and slow process for you, your family, and your friends. It is expensive because you will have to pay lawyers, court fees, and other fees. It can be unpleasant because a hearing must be held in open court, and it can be slow because it takes time to get a court date for the hearing. After the hearing, the Court will decide who should be your guardian or conservator and it may not be someone you would want handling your affairs. In addition, your conservator may be required to file certain documents with the court on an ongoing basis, which can be both time-consuming and expensive.

2.  When does the power of attorney take effect?

Your General Power of Attorney will take effect on the date you sign it unless it is a springing power of attorney. Your power of attorney remains in effect during your lifetime unless you revoke it.

A springing power of attorney may seem like a good way to prevent the agent from using the power of attorney before it is necessary, but it may lead to problems. The agent may have a hard time using the power of attorney because it may not be accepted unless the agent can prove that you are disabled every time he tries to use it. If you do not trust your agent to use the power of attorney only when it is necessary, you probably should name another person as your agent. If you want to use a springing power, you should consider including language about how your incapacity is to be determined, such as a letter from your physician that is to be attached to the power of attorney. Some attorneys will hold the power of attorney for you until a physician informs the attorney that you are no longer able to handle your own affairs.

The time to sign a general power of attorney is as soon as you decide that it’s a good planning tool. You never know when something might happen to you that would cause you to be unable to handle your affairs. This is true regardless of your age.

It is often too late to sign a power of attorney once you need it because you may no longer have the mental ability to sign a valid power of attorney.

3.  Will I still be able to handle my own business after signing a power of attorney?

Yes.  Signing a power of attorney does not mean you will lose the right to take care of your own affairs and make your own decisions.

As long as you are competent, the agent should act only when asked by you.  However, the agent may act legally at any time unless the general power of attorney is a springing power of attorney. You should tell the agent to use the power of attorney only if you become incapacitated or if you instruct him to act.

4.  What are my agent’s obligations to me when using a power of attorney to handle my business?

Under Virginia law, the agent you name must act only in your best interests.

Your agent should keep records and papers showing what she has done for you. You have the right to ask the agent for these records.

5.  Where do I get a power of attorney?

A lawyer should write a general power of attorney for you because you want to be sure that the agent will be able to use it if it becomes necessary.

Banks and other institutions may not accept a power of attorney that has not been prepared by a lawyer because it may not have the exact wording that is necessary. A lawyer should know what language should be in the power of attorney to make it “durable” and to give the agent the authority he or she may need to handle your affairs.

If you had a power of attorney prepared while you were living in another state or country and you have now moved to Virginia, that document may or may not be legal under Virginia law.  To be sure the document will be valid in Virginia, you should have an attorney review it for you or have a new one written.

Your local legal aid office may prepare a power of attorney for you if you are eligible for legal aid.  Most private lawyers charge only a small fee for preparing a power of attorney, particularly if you also have a Will prepared.

6.  Who should I appoint as my agent under the power of attorney?

You may appoint any competent adult as your agent. It is most important that you appoint someone you completely trust.

It is a good idea to name more than one agent in case your agent is unable to assist you when the time comes. You can name co-agents or a successor agent.

You can appoint an agent who lives outside Virginia; however, it may be more convenient if your agent lives near you.

Be sure you completely trust your agent, because you are giving that person powers that could be abused.

7.  Can I later change or revoke the power of attorney?

You can revoke or change the power of attorney at any time as long as you are still mentally able to understand what you are doing.

If you are no longer able to understand what you are doing, a court could appoint a guardian or conservator and revoke the power of attorney if it is necessary.

8.  Should I discuss the power of attorney with the person I name as the agent?

Yes. Be sure your agent is willing to use the power of attorney to take care of your business if it becomes necessary.

Instruct your agent(s) not to use the power of attorney unless you ask him to use it or if you become unable to handle your own affairs.

You need to make sure your agent knows where your power of attorney is kept, so he or she will have access to it if you become incapacitated.

If you keep the power of attorney in your safety deposit box, make sure that your agent will be able to get into the box if necessary. You may want to let your agent keep the power of attorney for you.

9.  If my agent needs to sign something when handling my business using a power of attorney, how should he sign?

Tell your agent that if he uses your power of attorney and must sign a document on your behalf, he should sign as follows:

__________ (Your name) by __________(Agent’s name), agent for _________(your name).

It will then be clear that he or she is signing on your behalf only and is not making himself or herself liable for your debts.

10.  What can be done if an agent misuses the power of attorney or does not properly handle my business?

If you are still mentally able to understand what you are doing and you believe your agent is not acting in your best interests, you can revoke the power of attorney.  You should notify the agent that he or she is no longer authorized to act on your behalf.  You should also notify any bank or other institution with which your agent may have done business for you so that they know the agent is no longer authorized to handle your business.

Under Virginia law, a person interested in your welfare (for example, a family member or a co-agent), can make a written request to your agent asking him or her to disclose any actions taken on your behalf within the past five years and to allow reasonable inspection of records about these actions.  If the agent refuses to comply with this request within 60 days, the person interested in your welfare can bring a case in circuit court to get a court order requiring the agent to provide the requested records.

You could also file a case in circuit court seeking an accounting from your agent.