Power of Attorney

Paying mortgages, depositing checks, filing taxes, buying or selling property and other assets, and making decisions about their health are just a few of the responsibilities and obligations that Ohio adults must manage every day. There are even laws in place requiring individuals to handle such tasks themselves, to protect their identity, finances, and health. Unfortunately, there are times when people cannot do these tasks themselves; but they still need to be done. How does an individual ensure that these things are taken care of even if they are not personally able to oversee them? They give someone power of attorney.

Power of attorney (POA) is a simple legal document that one person, called the principal, fills out to grant another person, called the agent or attorney-in-fact, the authority to handle certain matters. Power of attorney can be granted to handle one specific matter, such as the authority to sell a specific asset under particular circumstances, or it can be broader, granting the agent authority to handle all of the principal’s finances or healthcare decisions. There are five types of power of attorney that Ohio generally recognizes: limited, durable, general, medical, and springing.

A limited power of attorney is one that limits the agent’s authority. This is also sometimes referred to as a special POA. Generally, it is used in Ohio to grant the agent authority to handle one specific purpose, such as a particular business transaction or sale of a piece of real estate. In some cases, it may allow more than a single purpose, but it still limits the agent’s power to a very narrow scope.

Limited POAs can be revoked at any time by the principal and once the specific purpose has been completed, are no longer valid. These types of POAs are often used for convenience. For example, a military member may grant a limited power of attorney to someone to handle the sale of their residence when they are deployed overseas or an individual may grant one so a relative can renew their vehicle registration while they are on an extended business trip.

A general power of attorney is a very broad authority. In Ohio, this POA allows the agent to handle all of the principal’s financial affairs, including accessing their bank account, paying bills, signing documents, and making transactions. When an individual grants this POA, they can grant broad authority that allows the agent to do nearly anything or they can detail the specific authority they are granting, such as the authority to pay bills and dispute transactions.

A general POA takes effect immediately upon the principal signing it. Unless otherwise indicated, this type of POA remains effective until the principal revokes it, becomes incapacitated, or dies. Because it gives the agent such great power, Rhodium Law recommends limiting the period for which it is effective.

Durable POAs are similar to general POAs except that they remain in effect even if the principal becomes incapacitated. In fact, durable POAs are often used in estate planning specifically because they will continue after the principal is incapacitated. Like general POAs, a durable POA can grant extensive authority to the agent, but this is often why this particular POA is used. In the event that the principal becomes unable to handle their own affairs, their agent can step in easily and inexpensively. Without a durable POA, if the individual becomes incapacitated, a court would need to appoint someone to handle their affairs on their behalf.

Durable POAs take effect as soon as they are signed. Unless revoked by the principal, a durable POA remains in effect until the principal dies. Additionally, in Ohio, all POAs are durable by default unless the document contains language indicating that the POA is terminated by incapacity.

A springing POA, also called a conditional POA, is one that only takes effect when a very specific event has occurred, such as the principal becoming incapacitated. This can be beneficial for instances where an individual may want their agent to be able to take over but they do not want them to have any authority while the principal is still capable of handling their own affairs.

However, it is worth noting that there can be a lag in effect for a springing POA. For example, if the event that triggers the POA is the principal’s incapacity, it may take several days before there is a clear determination of their incapacity. Additionally, if there is confusion about the principal’s incapacity, such as suffering from undiagnosed dementia and having good days and bad days, the POA may not be triggered because there is no clear answer.

A medical POA, also called a health care proxy or a durable power of attorney for healthcare decisions, is a combination of a durable and springing POA. This POA grants the agent the authority to make healthcare-related decisions for the principal if the principal is unable to make those decisions for themselves. This requirement that the principal is incapacitated is what makes this POA durable (remains effective when the principal is incapacitated) and springing (only takes effective once a specific event occurs). This means that the designated agent does not have any authority until or unless the principal is unable to make their own decisions.

In addition to not taking effect until the principal is incapacitated, these POAs can also include a clause that indicates that the agent’s authority ends when the principal recovers from incapacitation and is conscious and able to make their own decisions again. Like all other POAs, this one also ends upon the principal’s death. Additionally, individuals can have different medical POAs for different circumstances and assign different agents to each of those POAs.

In March 2012, Ohio introduced the Uniform Power of Attorney Act (UPOAA). While this streamlined and harmonized Ohio’s POA laws with those of 28 other states, and made them more understandable, it also made significant changes to POAs. The most notable of these changes is that all POAs are considered durable under Ohio law unless they include language to indicate that they are not durable.

Powers of attorney that were created before March 2012 may still be valid. However, if an individual created a POA before March 2012 and has not updated it since, they may wish to consult with an estate planning attorney to have the form reviewed and ensure its compliance with the changes in the law.

When an individual wants to designate a power of attorney, they must choose who will act as their agent or attorney-in-fact. Whether the POA is limited, durable, medical, or springing, the principal is giving their agent a significant amount of authority over their affairs or one small part of their affairs. This means the wrong choice could result in extensive damage.

Individuals being considered as agents or attorneys-in-fact for a POA should be at least 18 years old and of sound mind, like the principal who is granting the POA. When deciding who to choose, the principal should consider many other factors beyond age, however.

The principal should first consider the trustworthiness of the person. Any POA grants the agent the ability to significantly harm the principal’s affairs, so ensuring the agent can be trusted to handle matters the way the principal would want and will not abuse their authority is important.

Other considerations include the agent’s maturity and understanding of the matters they are being entrusted to handle. Principals should choose someone who is capable of making extremely difficult decisions under stress, particularly for their health care proxy. They should also be sure that the person they choose understands the financial, health, or other matters they are handling.

Powers of attorney can grant very broad powers, but they can also be written to narrow the scope of those powers. However, regardless of the type or scope of any POA, there are certain things that the agent cannot do under any circumstances.

The most obvious is that the agent cannot make decisions for the principal after the principal’s death. All POAs terminate upon the principal’s death. Even if the agent knows what the principal would have wanted, they cannot act on behalf of the principal after death.

The agent cannot change or invalidate the principal’s will. The principal must do these things themselves. If the principal wishes to make changes or invalidate their will and is mentally competent but unable to speak or sign the will, they may want to consult with an estate planning attorney to learn how they might be able to make the necessary changes.

The agent also cannot act outside of the principal’s best interests or act against the terms of the POA. Acting in the principal’s best interests means that the agent should make decisions considering what is beneficial for the principal and no one else. Additionally, it means protecting the principal’s confidentiality, retaining an awareness of all money and property that falls under their care from the POA, and being obedient to any instructions the principal provides. Acting against the terms of the POA means taking any action not authorized by the POA or ignoring specific terms of the POA. For example, if the principal grants a POA for their agent to sell a piece of property and specifies that the property should not be sold for less than a certain amount, the agent would be acting against the terms of the POA to sell that property for less than the amount specified in the POA.

Powers of attorney can be unique. As a result, individuals are not limited to a single POA. Instead, they can have multiple POAs, each with its own agent, based on their needs. For example, when estate planning, an individual may use a financial POA to appoint one person to handle their financial affairs whether they are incapacitated or not, and use a medical POA to appoint a second person to make medical decisions when they are incapacitated.

Which powers of attorney an individual may need will be unique to their circumstances. If you would like to create a power of attorney but are uncertain which one or ones you may need, an experienced estate planning attorney with Rhodium Law may be able to assist you in determining the right POA for your circumstances. Contact us to schedule a free consultation and discuss your POA needs.