A power of attorney (POA) is a legal document that allows an individual to appoint another person to act on their behalf if they are unable or unwilling to act for themselves. Having a valid power of attorney means authorized actions may be taken on your behalf without the need for court intervention.
Powers of attorney may grant broad general authority, or they may grant power only for a specific purpose or length of time. An appointed agent has only the authority granted by the power of attorney and can be held legally liable for acting beyond its scope.
This blog discusses why powers of attorney are important life-planning tools and the types of authority they grant. A Chicago estate planning attorney at Plan Forward Legal drafts powers of attorney to meet the individual needs of clients and their families.
- General Power of Attorney vs. Limited Power of Attorney
- Why Have a Power of Attorney?
- Legal Requirements for Executing a Valid Power of Attorney in Illinois
- When a Power of Attorney Becomes Effective
- Powers of Attorney are Good Planning at Any Age
General Power of Attorney vs. Limited Power of Attorney
A general power of attorney refers to the level of authority granted to the appointed agent. An agent given general authority has the power to manage most, if not all, of the business matters on behalf of the principal.
A limited power of attorney, on the other hand, is a power of attorney given to an agent to do a specific task or to manage the principal’s financial or health care matters for a stated amount of time.
Situations where a limited power of attorney may be used include:
- For handling affairs at home during an extended absence (travel, military)
- Having a business associate act where one party cannot be present
- Authorizing temporary caretakers to give parental consent
- Healthcare decision-making in anticipation of a specific treatment or procedure
Limited powers of attorney expire upon completion of the authorized actions or upon the occurrence of a specific event or the expiration of a specific time period.
Why Have a Power of Attorney?
Illinois recognizes individuals’ rights to appoint agents to make property, financial, personal, and health care decisions on their behalf under the Power of Attorney Act. Having a valid power of attorney means you have pre-selected a person who can take certain actions or make certain decisions for you at a point in time that you decide.
Not having a power of attorney means a court would have to select someone to handle your business affairs if you become incapacitated, and a statute will dictate who will make healthcare decisions for you if you become unable to.
For instance, if you’re married in Illinois, your spouse cannot automatically make legal or financial decisions on your behalf without a power of attorney. For a spouse to obtain legal authority to handle business matters, a guardianship petition must be filed with and approved by a court.
Under the Illinois Health Care Surrogate Act, when there is no health care power of attorney (or living will), a health care provider must make a reasonable inquiry as to available surrogates who are then authorized to make health care decisions on behalf of someone who lacks decisional capacity, including whether to forgo life-sustaining treatment.
In descending order, the following persons are legally authorized to make health care decisions on behalf of an incapacitated patient without a court order or judicial involvement when there is no health care power of attorney or other advance directive.
- Legal guardian
- Spouse
- Any adult child
- A parent
- Adult sibling
- Adult grandchild
- Close friend
When there are multiple surrogates at the same priority level, it is their responsibility to make reasonable efforts to reach a consensus regarding life-sustaining treatment. Given family dynamics, this could create conflict and unnecessary delays that could be avoided by executing a health care power of attorney.
Legal Requirements for Executing a Valid Power of Attorney in Illinois
Powers of attorney must meet specific requirements to be valid. A person must have legal capacity to create a power of attorney. This usually means an individual must be at least 18 years of age and mentally competent to understand the relationship being created and the authority given to the agent.
Persons under 18 years of age can legally create health care powers of attorney under specific circumstances. The Consent by Minors Health Care Services Act grants the following classifications of minors the same legal capacity to act as persons of legal age concerning health care decisions.
- Emancipated
- Married
- Parent
- Pregnant
Powers of attorney must be signed by the principal and at least one witness. Powers of attorney regarding property matters must also be notarized. Health care POAs are not required to be notarized, though it is recommended.
When a Power of Attorney Becomes Effective
Unless there is a time or event referenced that triggers an agent’s authority, powers of attorney are usually effective at the time they are executed. For clarity, a power of attorney should specify when it becomes effective and whether it continues if the principal becomes incapacitated.
A durable power of attorney is a power of attorney that continues after the principal’s incapacity. The power of attorney must state that it is intended to remain in effect despite the principal’s incapacity. Durable powers of attorney are included in an estate plan to manage the risk of future incapacity.
A springing power of attorney is a power of attorney that does not become effective immediately but upon the occurrence of some event, such as the incapacity of the principal. The agent appointed in a springing power of attorney has no authority to act until the principal becomes incapacitated.
Termination of a Power of Attorney
A principal may terminate a power of attorney at any time as long as they are mentally competent. A POA terminates immediately upon the death of the principal. A non-durable power of attorney will terminate upon the principal’s incapacity.
Executing a new power of attorney will not revoke a previous power of attorney unless the new POA specifically revokes the previous POA or all previous POAs.
Powers of Attorney are Good Planning at Any Age
Most people probably don’t spend a lot of time thinking about who would legally have their back if they were suddenly unable to handle day-to-day decision-making. Yet the truth is that we don’t know what tomorrow will bring, and we all know stories about bad things made worse by lack of preparedness.
Powers of attorney aren’t complicated or expensive documents, and making some important decisions ahead of time is never anything but helpful for families dealing with difficult situations. Plan Forward Legal offers comprehensive estate planning services in the Chicago area.
