Whether you are concerned about future health problems, have assets that are difficult for you to manage, or will be absent for a period of time and unable to manage your affairs, a Power of Attorney may be a valuable tool. A power of attorney is used in situations where you, the principal, are unable to handle your own affairs or want someone else to handle them for you. The power of attorney gives legal authority to another individual or authorized company to make decisions on your behalf. You do not have to own businesses or be in poor health to consider utilizing powers of attorney; you can use a power of attorney if you are traveling out of the country for an extended period of time or if you just simply want someone else to handle things for you.
In Minnesota, powers of attorney must be written, signed, and dated in order to be valid. You can select who you want your attorney-in-fact to be. The attorney-in-fact is the person that will be making decisions on your behalf, so it should be someone who you trust.
Once you select who your attorney-in-fact will be, you can designate what types of decisions they can make on your behalf. This can cover a wide range of transactions, including banking, real estate transactions, business transactions, and more. Your power of attorney can authorize all of the available powers, or only powers that you individually select. For example, perhaps you have moved to another part of the state and need someone to handle the closing on your old property, you could grant that person a power of attorney that applies only to that transaction.
You also decide when the power of attorney becomes effective. The power of attorney can have what is called “springing” powers or it can have “current” powers. A power of attorney with springing powers is not effective until the condition you specify occurs, such as if you become incapacitated. In that case, the attorney-in-fact can only start making decisions for you after the condition has occurred. The problem with springing powers is that your banks and other institutions will require proof that the condition has occurred before they will honor the power of attorney, and obtaining sufficient proof can be difficult. By contrast, a power of attorney that is current and not dependent on the occurrence of a condition is more easily accepted by banks and other parties. In that situation, however, the attorney-in-fact is free to exercise his or power as soon as the executed power of attorney document is in their possession.
The attorney-in-fact can be a spouse, adult child, relative, or trusted friend of yours. The person should be someone who you trust to act on your behalf, as their actions will generally be binding upon you. Attorneys-in-fact can be reimbursed for expenses they incur while acting on your behalf, so they must keep an accurate record of receipts and paperwork to be provided to you or your guardian on a regular basis.
The power of attorney must terminate in certain situations or may terminate in permissive situations. A power of attorney is terminated upon your death, or if the attorney-in-fact is the spouse, upon the separation or dissolution of the marriage. The power of attorney is also terminated if you become incapacitated or incompetent unless there is language showing your intention to make the power of attorney “durable.” A durable power of attorney will remain valid even if you become incompetent or incapacitated. If you decide that you do not want the attorney-in-fact to have power of attorney anymore, you can revoke it at any time while you are not incapacitated. If you have an appointed guardian, that person may terminate the power of attorney before a notary public. Regardless of the method of termination, the attorney-in-fact must always be notified of the ending of the power of attorney.
It is important to note that the power of attorney does not give the attorney-in-fact authority to make health care decisions for the principal or for the principal’s children. For additional information, see Minn. Stat. §523.01-523.26.