What is a Power of Attorney?
A document known as a power of attorney is issued by one person, called the principal, giving another person, known as the agent or attorney-in-fact, the authority to act in regard to his or her affairs. Among the many responsibilities the agent can have are the ability to buy real estate , manage finances, and health care decisions. Without a power of attorney in place, these decisions become complicated when a principal becomes incapable of making decisions for themselves.
Different Types of Powers of Attorney in Pennsylvania
There are many different types of power of attorney forms in Pennsylvania. Among them is the durable, limited, medical and financial powers of attorney. Populating those forms are various powers or options that you can grant to your agent. The most important aspect of your power of attorney is that your agent will be able to transfer assets, access accounts, and otherwise manage your interest in all legal capacities. Therefore, it is very important the person appointed understands your wishes and what they are entrusted to do on your behalf. In Pennsylvania, if you ever become incapacited, the financial power of attorney will in most cases be the only document that may allow your agent to pay for your needs. No one else can prevent someone from trying to use a health care or other power of attorney document as a form of identification. Therefore, an agent may not be allowed to act on your behalf even with a health care power of attorney unless the document states otherwise.
How to Complete a Pennsylvania Power of Attorney Form
In order to properly fill out a Power of Attorney (POA) form in Pennsylvania, you must first decide whether you want to create a General or a Limited POA. A General POA gives someone the broad authority to manage your property while a Limited POA gives them the authority to make decisions in very specific areas.
Once you know whether you wish to create a General or Limited POA, you can get started on filling out the form. First, it is important to choose the right form for your POA – General or Limited – as well as whether you want to create a Healthcare POA or a Property POA. You must also decide how many copies of the POA you need for your needs. The POA form can be downloaded and printed or ordered through your lawyer.
The POA form will require the following decisions:
- The names and addresses of both the individual(s) creating the POA (the Principal) and the person who will be the Attorney-in-Fact.
- Under the "Powers of Attorney" section of the POA form, you are required to sign and date that section and to name the specific powers you are granting to your Attorney-in-Fact. It is critical that you take the time to individually initial the gifts you plan to give to your Attorney-in-Fact.
- Next, you will need to initial the gifts you believe your Attorney-in-Fact should be able to do on your behalf.
- You must then sign and date the form at the bottom to empower your Attorney-in-Fact with the power you are granting.
- Finally, you will need two witnesses in order to have your POA form legally valid. The witnesses should not be listed on the form as attorneys, notary publics or individuals who intend to receive the gifts.
Common mistakes when filling out a POA form in Pennsylvania include failing to provide a full and complete address for both the Principal and Attorney-in-Fact, leaving part of the form blank and forgetting to sign, print and date.
Requirements of a Valid POA in PA
For a power of attorney to be considered valid in Pennsylvania, it must meet certain requirements set out in the law.
Not only does a POA need to include certain language to make it effective, but it must also be signed and dated by the principal in front of two witnesses and notarized. Authorization must be created by the express terms as stated in the POA document in order for it to be a valid power of attorney. In Pennsylvania, there is a statutory form for a durable financial power of attorney requiring certain language under Act 95, but you do have the option to customize the form based on your preferences. Either way, the document should be signed in front of witnesses and notarized.
The POA must include specific language delegating authority for these six areas:
In addition to setting out the general grant of powers stated above, your power of attorney must contain specific language giving your agent the power to do any of the following:
When is a Power of Attorney Effective?
In the state of Pennsylvania, a power of attorney document can become effective under various circumstances, primarily dependent on the present and future needs of the principal. That is, it is vital to know whether or not the principal is capable of making decisions themselves at the time the POA becomes effective.
A general principle of power of attorney documents in Pennsylvania is that a POA typically allows the agent(s) to make all legal and financial decisions on behalf of the principal, unless the document specifies particular limitations .
Importantly, it is critical that the POA be effective from the time of execution so as to provide the agent with authority to act, for example, in the event that the principal were to become legally disabled or incapacitated. This type of power of attorney is known as an "immediate power of attorney." In many instances, this is the type of POA that is best suited for the needs of the principal.
At the same time, a springing power of attorney is another option that the principal has under Pennsylvania law. A springing POA can be drafted in such a way that the power of attorney document becomes effective at a later date by providing for a future event or situation, including the disability of the principal.
Powers and Duties of the Attorney-in-Fact
The power granted to the agent by the power of attorney is significant. It is up to the individual executing the power of attorney to choose wisely and understand that the powers granted are broad. The greatest concern with broad granting of powers to an agent is that the agent (also known as attorney-in-fact) may twist the purpose of the power of attorney so that the agent uses the attorney-in-fact authority for his or her own benefit and not for the benefit of the principal. Whether powers are used for the benefit of the principal is a question of fact and will be judged on a case by case basis.
The general rule is that an attorney-in-fact is required to act in accordance with the principal’s reasonable expectations to the extent actually known by the attorney-in-fact, and otherwise in the best interest of the principal. Because the principal is not present to mandate or prohibit the actions of the attorney-in-fact, the law presumes that the conduct of the attorney-in-fact at all times for the benefit of the principal. The attorney-in-fact must act loyally for the sole benefit of the principal and must not create any conflict of interest that might deprive the principal of his or her rights under the power of attorney.
Revoking a Power of Attorney or Making Changes
A Pennsylvania power of attorney (POA) can be revoked or changed (known as "amending" the POA) by submitting a written and signed notice of the revocation or amendment. It is better practice to have the original power of attorney signed by the agent, but it is not required under Pennsylvania law that the agent sign the original power of attorney document. If the agent did not sign the original power of attorney document, however, it is recommended that he/she sign the notice of the revocation or amendment to prove that they are aware of the same.
A new power of attorney can be executed and function like an amendment, but is not technically an amendment. We have seen this done in the past when there is a fall out between the agent and the principal. The principal will sometimes decide that his or her daughter-in-law will make better day-to-day decisions for health care matters than his or her son, so the principal will draft a power of attorney and specify that daughter-in-law as the sole agent.
An agent can renounce CO. 2/2/2019 that power under Pennsylvania law. This essentially means that the agent does not want to act as the agent. If an agent is no longer the agent, they can sign a notice that states that they no longer want to be the agent appointed by the principal.
It is important to note that if a principal wants to terminate the powers granted to an agent, do not contact the agent and verbally tell them that you are terminating their appointment. Make sure that you execute a simple notice revoking your agent’s powers and send it to him/her. Verbal communication is not sufficient for the termination.
Pros and Cons of Granting a Power of Attorney
A power of attorney is a legal document that can greatly assist you in many facets of life. But as with everything, there is a cost, however, if there’s an upside to a power of attorney, there’s a downside too. Let’s break it down into three parts: what are the advantages? What are the disadvantages? How do we prevent the worst-case scenario?
Some simple advantages of having a power of attorney in place are: You can see the utility of this document. It’s great to have someone else step in for you when you’re not able to do something. It grants the trusted person the authority to act on your behalf .
But there is a downside, the potential for abuse. A power of attorney gives a trusted person the permission to make decisions on your behalf; however, these decisions may not always be in your best interest. One way to prevent abuse of a power of attorney is to limit its use. Deciding just one type of action that a person will have control over on your behalf can help to diminish the opportunity for misuse.
The biggest key to giving someone the power of attorney is to first, realize that this person needs to be someone who can be trusted. Secondly, implement checks and balances to ensure this person cannot abuse the power given to them.