Using the Power of Attorney
When is a Power of Attorney effective?
The Power of Attorney is effective as soon as the principal signs it, unless the principal states that it is only to be effective upon the happening of some future event. These are called “springing” powers, because they spring into action upon a certain occurrence. The most common occurrence states that the Power of Attorney will become effective only if and when the principal becomes disabled, incapacitated, or incompetent.
Okay. I’m ready to do something as an attorney-in-fact. What do I do?
After being certain that the Power of Attorney gives you the authority to do what you want to do, take the Power of Attorney (or a copy) to the third party. Explain to the third party that you are acting under the authority of the Power of Attorney and are authorized to do this particular act. Some third parties may ask you to sign a document stating that you are acting properly. You may wish to consult your attorney prior to signing it. The third party should accept the Power of Attorney and allow you to act for the principal. When acting as an attorney-in-fact, always make that clear when signing any document.
How should I sign when acting as an attorney-in-fact?
You always want it to be clear from your signature that you are not signing for yourself but are, instead, signing for the principal. If you just sign your own name, you may be held personally accountable for anything you sign. As long as your signature clearly conveys that you are signing in a representative capacity and are not signing personally, you are okay. Though lengthy, it is therefore best to sign as follows:
Rachel Wilson, by Howard Carver as her attorney-in-fact
In this example, Howard Carver is the attorney-in-fact and Rachel Wilson is the principal.
The exact wording is not important. Just make sure you indicate that you are signing for your principal, not for yourself.
The third party will not accept the Power of Attorney. What now?
Call your attorney. For a number of reasons, third parties are sometimes hesitant to honor Powers of Attorney. Still, so long as the Power of Attorney was lawfully executed and so long as it has not been terminated, third parties may be forced to honor the document. Under some circumstances, if the third party’s refusal to honor the Power of Attorney causes damage, the third party may be liable for those damages and even attorney’s fees and court costs. Even mere delay may cause damage.
It is reasonable, however, for a third party to have the time to consult with legal counsel about the Power of Attorney. Banks will often FAX the Power of Attorney to their legal department for approval. There comes a time, of course, when delay becomes unreasonable. Upon refusal or an unreasonable delay, call your attorney.
Why do third parties sometimes refuse to honor Powers of Attorney?
To third parties, the Power of Attorney you have shown them is nothing more than a piece of paper with writing on it. They do not know if it was executed properly or forged. They do not know if it has been revoked. They do not know if the principal was competent at the time the Power of Attorney was signed. They do not know whether the principal has died. Third parties do not want the liability if anything goes wrong.
Some third parties refuse to honor Powers of Attorney because they believe they are protecting the principal from possible unscrupulous conduct. Refusal is more common with older Powers of Attorney, although in fact age should not matter. If your Power of Attorney is refused, talk to your lawyer.
What is an Affidavit and do I have to sign it?
An affidavit is a sworn written statement. A third party may require you, as the attorney-in-fact, to sign an affidavit stating that you are validly exercising your duties under the Power of Attorney. If you want to use the Power of Attorney, you do need to sign the affidavit if so requested by the third party.
The purpose of the affidavit is to relieve the third party of liability for accepting an invalid Power of Attorney. You may wish to consult your attorney prior to signing it.
What happens to the third party if they unreasonably refuse to accept the Power of Attorney?
The law provides that that third party may be liable for any losses caused by the refusal as well as attorneys’ fees and court costs. The problem, however, can usually be resolved with a call from your attorney to the third party. In most cases, once the law is explained to the third party, the Power of Attorney is accepted without further ado.
To learn more about estate planning and elder law, visit Estate and Elder Planning by David Wingate at www.davidwingate.com. For an Initial Consultation, call (301) 663-9230. We can assist you with powers of attorneys, living wills, wills, trusts, Medicaid planning, and asset protection. With office locations in Frederick, Washington, and Montgomery Counties, Maryland, we are here to provide you with peace of mind.
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