Many people consider themselves familiar with a Power of Attorney, but may not fully understand what a Power of Attorney can and cannot do for them and their loved ones. If you have not had the need for one, or you have one that has worked for your needs, you likely haven’t given much thought to what a Power of Attorney actually says, or should say. Many businesses or agencies accept a Power of Attorney without reading it, however, the reality is that a Power of Attorney grants you only the powers specifically outlined in the document. If you exercise a power as the agent not granted in the document, you have breached a fiduciary duty and may be personally liable. If you as the principal fail to give sufficient authority to your agent, you may hinder their ability to handle your business in a manner that serves your best interests and protects your assets. It has been our experience that far too few individuals and businesses pay attention to the language of the Power of Attorney and fully understand the consequences of what that language provides and does not provide, when it is the details of this document that give it its power.
First: What is a Power of Attorney? There are two types of Powers of Attorney (POA) that this article will discuss: (1) a Durable Power of Attorney; and (2) a Medical Power of Attorney. With any Power of Attorney, there is a principal who grants authority to an agent to act on their behalf. However, the principal remains in charge and is able to revoke a Power of Attorney at any time. We will discuss both a Durable Power of Attorney and Medical Power of Attorney in detail.
Durable Power of Attorney. A Durable Power of Attorney is a written instrument, defined by Texas law, which designates another person as attorney in fact or agent for the person granting a POA and is signed and acknowledged by that person in front of a notary public. The authority of the agent is limited to only the specific powers listed in the POA. A POA may be effective immediately or may be a “springing” POA that becomes effective upon the principal’s subsequent incapacity. Very simply, a Durable POA allows someone to act on your behalf with third parties to handle your business.
The most commonly known type of POA is a Statutory Durable Power of Attorney. The form for such is found in Section 752.051 of the Texas Estates Code and is often used by individuals that have searched and found the terms on the Internet. The Statutory Durable Power of Attorney allows you to check a number of powers that can be granted to the agent that relate to financial matters. The Statutory Durable Power of Attorney is generally sufficient for actions such as handling daily banking activity on behalf of the principal and corresponding with providers contracted with the principal (utilities, phone, etc.).  However, the Statutory Durable Power of Attorney does not grant authority to the agent that may become necessary in a comprehensive estate plan, particularly in providing for long term care. The Statutory Power of Attorney does not provide for the creation of trusts and it also limits the amount of a gift to an individual to not exceed the amount of annual exclusions allowed by the federal gift tax. These, and other omissions in the Statutory Durable Power of Attorney, do not appear alarming initially but can quickly become so if the principal that granted the POA becomes incapacitated and can no longer make those decisions on their own and have not granted the authority to do so to a trusted agent.
You can easily protect yourself in this situation by having an Elder Law attorney draft a Durable Power of Attorney for you that takes into consideration your specific circumstances and needs. This POA will be much lengthier than a Statutory Durable Power of Attorney and provide for a much greater depth of individual situations, including those that would allow for long term care planning and asset protection.
Medical Power of Attorney. A Medical Power of Attorney is a written document that gives the agent the power to make health care decisions on behalf of the principal. An agent does not have the authority to make any medical decisions on behalf of the principal until a physician certifies in the principal’s medical record that the principal is incompetent to make his or her own medical decisions. Very simply, a Medical POA allows an individual to make medical decisions for you once you become unable to do so.
To be effective, a Medical POA must be executed with the appropriate formalities. A Medical POA must be signed in the presence of two ascribing witnesses, or acknowledged by a notary. The appropriate language for the Medical POA is found in Section 166.164 of the Texas Health and Safety Code and must be executed in conjunction with the Disclosure Statement found in Section 166.163. A Medical POA may also include personal requests for an intimate and important time in your life. An Elder Law attorney can help you consider your individual situation and draft a Medical POA that is appropriate.
Second: What’s the Rush? Many don’t feel a sense of urgency to put important estate-planning tools into place, such as a Durable and Medical Power of Attorney. However once you or someone you know has a situation where they needed a POA or had a POA that was poorly drafted, you will quickly develop that sense of urgency. We run across that situation far too many times in our practice and hope you will heed the warning to meet with an Elder Law attorney sooner rather than later to discuss these important documents, as well as other documents that are important to your estate planning and protection of your assets.
A client named Sarah learned about the importance of having comprehensive estate planning and Power of Attorneys in place the hard way. Sarah had been happily married to her spouse for over ten years when he suffered a number of significant health care crises in a short period of time. These crises rendered Sarah unable to care for her spouse, Walter, at home and after he left the hospital he was admitted to a skilled nursing facility. Prior to his marriage to Sarah, Walter had executed a Medical Power of Attorney giving authority to his adult sibling, Jean, to make medical decisions on his behalf if he became unable to do so. After Sarah and Walter married, they visited an attorney that updated their wills and did a statutory power of attorney, but no other estate planning documents. Because Walter had not updated his Medical POA, nor revoked the Medical POA granted to his sister Jean, even though he was married to his spouse Sarah, it was Jean that the medical care providers had to ask for medical decisions. This turned into a conflict between Jean and Sarah and the situation escalated quickly. Sarah found herself in the position of not being able to make medical decisions for her spouse, not being able to provide for his financial affairs or get him qualified for Medicaid which he desperately needed and the stress of the situation took away from her ability to provide Walter with the love and support that she as his wife wanted to provide. We were able to help Sarah right this situation, however it was a lengthy and expensive process that could have been easily avoided by a visit to an Elder Law attorney that would have discussed the importance of having appropriate estate planning documents in place.
Sarah experienced what so many of our clients experience: an unexpected health crisis, which turns into a housing crisis after that individual cannot return to their home, which turns into a financial crisis when that family realizes the cost of a long-term care facility is upwards of $4,500.00 per month. We assist clients everyday that find themselves in this type of urgent situation, however with some planning in advance, an Elder Law attorney can make the best plan to provide protection for your assets and your legacy.
Third: What now? We hope by learning more about Power of Attorneys and the role that they can play in your comprehensive estate plan you are interested in getting the appropriate documents put into place for you and your loved ones.
So what is the first step? Contact an Elder Law attorney to set up a consultation to discuss your individual needs, concerns and situation. That attorney can tailor a plan to meet your needs. That attorney will be glad to go over each document and its importance with you. You do not need to gather personal information prior to making the appointment, the attorney can help you through that process and almost all the necessary information you will know, or will have readily accessible. The biggest mistake you can make is putting off this type of planning because you feel you don’t understand the documents, don’t think you have time to gather the information, or most commonly don’t want to think about a potential health crisis, or assume that you and your loved ones will not be impacted by a health crisis. An Elder Law attorney can help give you and your loved ones peace of mind. Don’t delay in taking the necessary steps to protect yourself and your family.
 Although some businesses, primarily financial institutions, have specific forms they require you use for a grant of this type of authority when dealing with them.
Kristen J. Ishihara has been a practicing attorney in Longview, Texas since 2006. She graduated from Baylor Law School with honors and is licensed to practice in Texas, Arkansas and Oklahoma. Kristen is an accredited Veterans Affairs attorney, as well as a member of the National Academy of Elder Law Attorneys. She was elected to the Longview City Council as representative for District Four in 2014 and enjoys serving the community in that capacity. Kristen was honored to be selected as an Emerging Young Leader in 2013 by the Longview Chamber of Commerce. Kristen is also an active member with the Junior League of Longview and the Zonta Club of Longview.