CASWELL BELL & HILLISON LLP
FRESNO, CALIFORNIA

THE POWER OF A POWER OF ATTORNEY

A power of attorney is an instrument that authorizes an “agent” to act on behalf of someone else (the “principal”) in a legal or business matter.  A durable power of attorney is a written instrument by which one person authorizes another to act as his or her agent notwithstanding (or as a result of) the first person's subsequent incapacity.

A power of attorney can be effective immediately or it can “spring” into effect “at a specified future time or on the occurrence of a specified future event or contingency.”

The fact that a durable power of attorney is remains after the principal is incapacitated is its distinguishing characteristic.  When a nondurable power of attorney is created, the authority of the attorney-in-fact generally terminates if and when the principal loses the capacity to contract.

By law, all powers of attorney terminate upon the death of the principal.

Effect of Power of Attorney
A power of attorney is a significant legal document, and can wreak havoc if the powers are given to an unscrupulous person.  A durable power of attorney can grant the attorney in fact authority to make decisions concerning all or part of the principal's real property, personal property, or both.

Health Care Power of Attorney
Powers of attorney for health care allow a designated agent to make health care decisions for the principal to the same extent that the principal could make health care decisions if the principal had the capacity to do so.  A power of attorney for health care is a special document.  While a durable power of attorney for personal care authorizes the attorney in fact to make many decisions of a personal nature, it does not authorize the attorney in fact to make health care decisions for the principal unless it contains specific authority to that effect.

The Powers Can Be Sweeping
A power of attorney can lead to unexpected (or unintended) results.  In one case, an elderly woman executed a power of attorney in favor of her younger sister.  A dispute arose when the younger sister used her power to name herself as the beneficiary of the elderly woman’s life insurance policy.

The children and grandchild argued, to no avail, that the terms of the power of attorney instrument did not give the younger sister the authority to name herself as the beneficiary of the life insurance policy.  Unfortunately for them, the instrument language was broad enough to authorize the agent to change the beneficiaries of the principal’s policy.

It was significant that the power of attorney did not incorporate by reference the various powers listed in the statutory Power of Attorney Act.  In cases in which the powers listed in the Act are incorporated by reference into the power of attorney, an agent is not authorized to change the beneficiary of the principal’s life insurance policy unless the principal has expressly authorized the agent to do so within the power of attorney.  See California Probate Code section 4264.  Since there was no mention of the Act in the instrument in question, but only a broadly worded grant of authority, the sister had not exceeded her powers.

A power of attorney can be a valuable tool in estate planning, but it should be properly drafted to ensure that the powers contained therein are appropriate.  Always consult with a qualified professional before executing a power of attorney.

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