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Take control of future by giving away some control today

| Mar 19, 2021 | Power of Attorney

Most people have heard of the legal document called a power of attorney, but few understand the true effectiveness and limitations of a POA. To make sense of this and related documents, one must first unpack an alphabet soup of legal terms.

To start with, the person that initiates and signs the POA is the principal or grantor. The person given authority is the attorney in fact.

A simple POA allows the AIF to do and sign documents on behalf of the grantor. Sounds good in the right situation, right? But, a simple POA is something that is seldom used. Why? A simple POA becomes ineffective upon the incompetency of the grantor of the POA. As a result, when a POA is presented to someone as evidence that the AIF has authority to act on behalf of the grantor, there is no way to know if the grantor is competent, so the POA will most likely be rejected. How is this problem solved?

The Ohio Legislature has solved this problem having created the durable form of a POA which is referred to as a durable power of attorney. The DPOA survives incompetency. Therefore, for the company or individual who is presented with a DPOA by an AIF, there is no need to confirm the competency of the grantor. The DPOA is commonly presented to banks and brokerage houses to allow the AIF to handle financial matters. But, because the AIF does have power to manage financial matters, it is important to name an AIF who is reliable and with whom you have complete trust.

The biggest and most important limitation of a POA or a DPOA is that it becomes void upon the death of the grantor. This is not commonly known but it is a serious limitation. The death of the grantor is the reason it is important to have a will which names a personal representative or a trust which names a trustee. The personal representative or the trustee is able to act on behalf of the deceased. This is an over-simplification and a full explanation is beyond the scope of this article. Suffice it to say that POAs and DPOAs operate before death, and wills and trusts function after death.

A health care power of attorney is a form of DPOA. What distinguishes a HCPOA from a DPOA is the HCPOA deals exclusively with health care issues. The DPOA deals with financial matters. The HCPOA allows the AIF to make medical decisions on behalf of the grantor.

Depending on how the HCPOA is drafted, the AIF’s power can be limited to making decisions regarding the treatment of the grantor, but it can be expanded to making decisions to withhold treatment to the extent it can result in the death of the grantor. Literally, the AIF has the power to pull the proverbial plug on the grantor. Obviously, that kind of power is only given to someone the grantor trusts and is fully aware of the grantor’s desires. The power to end the grantor’s life can also be limited so that it can only be done if a physician, or even two physicians, agree the grantor is in a persistent vegetative state.

The properly drafted HCPOA also opens the door to allow a health care provider to give medical information to the AIF which would otherwise be prohibited because of a patient’s privacy rights, legally known as HIPAA protections.

Like any other matters of legal significance, a DPOA and a HCPOA should be drafted by an experienced attorney. It is tempting to pull a form off the internet, but you will not know if it is a legally sufficient document until, perhaps, it is too late.

This article originally appeared as a column for the Cleveland Jewish News.