A power of attorney is a document whereby the person signing (the principal) selects the person(s) they want to make certain types of decisions for them (the agent). Generally there are two types of powers of attorney: health care powers of attorney and financial powers of attorney. Health care powers of attorney designate an agent for medical decisions. In Georgia we use the form and term “Advance Directive for Health Care” to refer to our health care power of attorney document. A financial power of attorney is used to designate an agent for financial or legal decisions. You may hear the terms financial, general, or durable powers of attorney used to refer to this type of document. This article will focus on financial powers of attorney and discuss for whom and when they are appropriate.
In order to sign a financial power of attorney the principal must be able to understand the document and be able to communicate to others that they understand the document. The capacity of another person can be very difficult to evaluate. To give a little context, at minimum, a principal should understand: who their family is, what their financial assets are, that the purpose of the document is to give their agent the authority to act on their behalf, and the specific powers they are granting to their agent in the document. If the principal is not capable of understanding these details then they do not have the level of understanding necessary to sign a financial power of attorney. We understand this can be confusing for people who are trying to help a family member struggling with health issues because they are often told repeatedly that they need to get a power of attorney. However, if your friend or family member lacks the basic understanding described above it is not appropriate for them to sign a power of attorney.
The principal must also be able to communicate in order to demonstrate to others that they possess the level of understanding described above. If your friend or family member is non-communicative, it is not appropriate for that person to sign a power of attorney.
Perhaps the most often misunderstood aspect of powers of attorney is that the agent’s authority to act on behalf of the principal ends when the principal dies. We are often contacted by potential clients who are in a rush to get a power of attorney done for a family member who is dying because they have been told they need one. If your friend or family member is in the process of dying or will die relatively soon, it is likely too late for a power of attorney to be of much use. We often advise people in that situation to focus on caring for their family member and keeping them comfortable during this time. The power of attorney cannot be used after their death. What happens after their death will be governed by Georgia Probate Law and the terms of their Will, if they have one.