You need a power of attorney and here is why!

When created properly, a power of attorney, (hereinafter, “POA”), is a legally binding estate planning document that provides its creator (principal or grantor) the important ability to appoint one or more people to act on their behalf in areas such as managing property, making medical decisions, or addressing financial affairs. Alarmingly, approximately 50% of American adults lack any form of POA, but that is not surprising when you realize that only 45% of adults over the age of fifty-five (55) have a will. A POA is such a regularly occurring part of any estate plan, that if an attorney does not encourage their use in an estate plan, it is time to look for another attorney.

POAs are available for use by any emancipated person over the age of eighteen (18), but when executing a POA, the principal must strictly adhere to Missouri law. Section 442.230 of the Revised Statutes of Missouri, mandates that a POA is valid if the formalities set out by state law are followed. The formalities to create a valid Power of Attorney are requirements and are not negotiable. As a result, a principal should obtain the assistance of a seasoned attorney in the creation of any POA.

While there is no perfect time to establish a POA or estate plan, it is generally done when an illness arises, when the principal ages, when a disability occurs, when a principal travels often, or simply when the principal sees the light and realizes death captures us all. There are several types of POAs. Some take effect immediately after signing, and others spring to effect upon an event or expressed date identified by the principal. In this article, we will explore the types of POAs and their uses in hopes it will encourage everyone to establish an estate plan and one or more POAs.

Often, the term POA is inappropriately used to describe the person entrusted to help a principal. This is a common but unfortunate error. Instead, the term POA describes the document that expressly identifies the principal’s attorney-in-fact (a/k/a “agent”) and his or her duties. To that end, there is no such thing as a person who serves as POA. Instead, they serve as agent pursuant to the terms of a POA.

Whether it be a short-term or long-term situation, an agent is the person responsible for making decisions on behalf of the principal as a fiduciary. So an agent should be someone who has the principal’s best interests at heart – someone who is responsible – someone who is trustworthy – and someone who is a strong communicator. An attorney-in-fact need not be an attorney, financial advisor, or relative. They must only be eighteen (18) years of age or older and of sound mind. At my law firm, we strongly encourage our clients to consider additional variables such as someone who is not a felon, someone who does not suffer from chronic financial difficulties, and someone who is located conveniently to the principal. In choosing someone with those specific qualities, many potential difficulties can be avoided. For many people, their agent is a parent, adult child, or close family friend. The responsibilities that come with being assigned an agent in a POA might not be for everyone, so it is suggested that all principals ask for consent before naming an agent or attorney-in-fact.

A common client question at our law firm is “may I appoint multiple attorneys-in-fact?” The answer is yes, a principal may appoint one or more attorneys-in-fact; however, unless specific responsibilities for each person are expressed in the POA, all agents must agree on every decision. In today’s society, the probability of such harmony is unlikely. For that reason, and to avoid almost certain conflict, we encourage our clients to select one agent at a time with successor agents designated in case a need arises. The appointment of successor agents is always a good idea when choosing one agent at a time so as to avoid the need to draft new POAs as agents disappear or become unqualified.

A POA may include text providing that the decision-making power of an agent takes effect immediately. Still others may initiate an agency relationship upon the occurrence of an event, or at an expressed date or time. For example, a springing power of attorney is not immediately effective but becomes effective at some future date, as dictated in the POA. An example would be a healthcare power of attorney that becomes effective when the principal’s treating physician determines the principal is unable to manage his or her own affairs.

When executing a POA, the principal establishes the enumerated powers and the effective start date for each document. There are three general types of POAs. There are general, durable, and limited POAs. Within those three general categories are military POAs, healthcare POAs, and financial POAs. A general POA grants broad powers to act with respect to the principal’s affairs while the principal is alive and not incapacitated. A durable POA, however, remains in effect even after the principal becomes incapacitated so as to avoid the need for a guardianship proceeding. A limited power of attorney, sometimes referred to as a special power of attorney restricts the agent’s powers to a specifically expressed purpose. An example would be when a principal appoints an agent to help sell a vehicle for a period of one week. The limited POA would grant an agent the ability to sign closing documents, deliver the vehicle, and obtain the purchase amount. After the sale, the POA would no longer be valid because the limited purpose was accomplished.

In Missouri, organizations like the Missouri Bar sponsor and distribute documents that may confuse the general public and suggest that a healthcare directive is the same as a healthcare POA. They are not the same thing, but they are often confusingly placed in the same document by unsuspecting parties. Healthcare directives (also known as living wills and/or advanced healthcare directive and/or medical directive) allow principals to direct that others follow instructions at the principal’s end of life. In many living wills, a principal (not an agent) identified as terminally ill will instruct others to continue or terminate certain types of care such as chemotherapy, radiation, surgery, artificially supplied nutrition and hydration, antibiotics, and any and all other life prolonging medical procedures.

Regardless of its type, most POAs are effective until the POA expires or until the principal dies. Section 404.717 RSMo., specifically reads that a POA ends upon the “death of the principal” but for the following two exceptions: (a) to give or withhold consent to an autopsy or postmortem examination; or (b) to make an anatomical gift of, or prohibit an anatomical gift of, all or part of the principal’s body under the Revised Uniform Anatomical Gift Act or to exercise the right of sepulcher over the principal’s body under section 194.119.

Once executed, a POA can be shared with agents, or filed away in a safe place like a safe deposit box or a fireproof safe. Each principal must decide for themselves if the documents will be shared or remain confidential as there is no POA directory in Missouri. At our firm, we suggest our clients share their healthcare POA with primary physicians and treating hospitals at a minimum so they are readily accessible when a medical emergency arises. The Health Insurance Portability and Accountability Act passed in 1996 (HIPAA) will prohibit those recipients from sharing the POA with others.

Finally, once a POA has been executed, each principal should review the document every 3-5 years to confirm accuracy and to reflect all developments in life. For example, if a principal falls out of contact with an agent, or if the principal moves to another state, it might be time to revise the document. As with any revision to an estate planning document, it is in a principal’s best interests to involve an experienced attorney.

What happens if there is no Power of Attorney? If there exists no POA and something happens to a principal, their friends and loved ones may be required to go to court to obtain authority to address financial matters and make medical decisions for the principal. During a health emergency, there may not be time to do this. Moreover, should friends and loved ones live too far away or be otherwise unable to serve, a complete stranger could be appointed by a court to make those decisions.

Todd Miller is a monthly contributor and regularly writes and speaks on various legal topics including bankruptcy, estate planning, probate, and elder law. He formed the Law Office of Todd Miller, LLC, 1305 Southwest Blvd., Ste. A, Jefferson City, Missouri in 2006. He has been awarded the Substantial Contributor Attorney Award by the Missouri Bar and ranked as one of the “Top Attorneys in Missouri” by The Legal Network. Mr. Miller earned his juris doctorate degree from the University of Missouri School of Law in 1999 and graduated with honors from Lincoln University in 1991. You may find him at www.toddmillerlaw.com (573) 634-2838 or on Facebook, Instagram, and Twitter.