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Creating a Power of Attorney

When individuals create a power of attorney they are stating what they want their agent to be able to do for them. For the power of attorney to be effective the principal must be competent to give this authority. In other words, the principal must know and understand what types of decisions need to be made. If the principal is mentally competent, but physically unable to sign his name, any mark the principal makes with the full intention that other regard the mark as the principal’s signature will be acceptable.

In most cases when individuals create a power of attorney, their signature on the form should be witnessed by a notary public. If the power of attorney grants the power to sell, lease, or otherwise dispose of the principal’s real estate, the principal should also have the power of attorney recorded with the Registry of Deeds. The Registry of Deeds usually will be located in the county courthouse wherein which the property is located. The principal should give the agent the original power of attorney document to show to any person, business, or organization involved in the transactions. The principal should keep a copy for his records. If the principal intends to delay the agent’s ability to conduct business for the principal, he may choose to keep the original document himself until such time as he wants the power of attorney to be used.

In order to create a legally effective power of attorney, the principal must be mentally competent. The principal needs to know and understand what he is doing. A person who is mentally incapacitated cannot meet these requirements. The law does not require the principal to hire a lawyer to draft the power of attorney. However, if the principal intends to grant important powers to the agent, it is a good idea to seek legal advice before the principal signs the document. The principal should make sure that he understands the details built into the power of attorney as well as the potential for legal or financial difficulties it may present.

In most instances, all the principal needs to do to create a legally valid power of attorney is properly complete and sign (before a notary public) a fill-in-the-blanks form that’s is a few pages long. Besides the nearly universal requirement for a power of attorney to be witnessed by a notary republic, there are few formalities to executing a power of attorney. Some states require a certain number of competent witnesses to watch the principal sign the document before the notary, and some states recommend certain forms, but none of them are mandatory to create a valid power of attorney. But some powers can be delegated to an agent only if they are specifically mentioned in the power of attorney document. Those requiring explicit language include the power to do the following:

  • make gifts of the principal’s money or other assets,
  • amend the principal’s will or community property agreement,
  • name beneficiaries of the principal’s insurance policies.

If the principal is married and are concerned about what would happen if the principal’s spouse became ill and needed nursing home care or other long-term care, the principal may want to add some additional specifically authorized powers. It may be helpful for Medicaid eligibility to include the power to revoke a community property agreement and to transfer property from the disabled spouse to the principal. It is a good idea to consult with a lawyer about these more complicated issues.

When individuals create a power of attorney, they can name two or more people to serve as agents at the same time. They can also name an alternate agent to assume powers under the power of attorney under certain circumstances, such as the death or incapacity of the first agent. Before principals give authority under their power of attorney to more than one person at the same time, they should consider whether confusion or some other conflict may result. It is wise to discuss the potential advantages and disadvantages with a lawyer before giving powers of attorney to more than one person.

Inside Creating a Power of Attorney