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Commencement
¶ Commencement of Power of Attorney
The notion of commencement of a Power of Attorney is tied to the notion of a Power of Attorney becoming legally binding upon the principal.
In turn, the notion of becoming binding upon the principal is often said to mark the point in time when a Power of Attorney “becomes effective” (“becoming effective” being a concept of significance, for example in relation to springing Powers of Attorney and Powers of Attorney generally, see Appendix 1).
A Power of Attorney is presumed to be binding upon the principal (i.e intended to become effective) upon being properly executed by the principal.
This presumption may be overcome, for example where the Power of Attorney specifies otherwise.
¶ A Special Word About Florida
In Florida, the creation of a Power of Attorney that is intended to become effective in the future is prohibited, by virtue of §709.2108(3).
§709.2108(3) states:-
"…a Power of Attorney is ineffective if the Power of Attorney provides that it is to become effective at a future date or upon the occurrence of a future event or contingency”.
¶ Distinction Between Commencement Of The Power of Attorney And Commencement of Authority to Perform Tasks
Compare these two options:-
- a Power of Attorney that is said to become effective on a future date
- a Power of Attorney that is said to become effective immediately upon being properly executed by the principal, but only authorizes agents to perform tasks after a future date
These two concepts are often confused, sometimes to suggest that for example, where a Power of Attorney becomes effective immediately upon being properly executed by the principal, but only authorizes agents to perform tasks after a future date, the Power of Attorney is somehow commencing on that future date.
Confusion exists in respect of this example because:-
- in practical terms, it seems correct to speak of such a Power of Attorney commencing on the relevant future date
- in legal terms, it commences at the time it is properly executed by the principal
To remove the confusion, it is important to remember that rights are acquired and obligations imposed upon the Power of Attorney becoming effective, including rights on the part of the principal and agent, despite no agent being authorized to perform the relevant tasks.
Those rights include as merely examples:-
- the right of the principal to expect the agent to comply with any directions recorded in the Power of Attorney
- the duty of an agent to maintain confidentiality
- the duty of a principal to potentially indemnify the agent for expenses incurred in association with performing in their role as an agent, albeit presumably not expenses incurred performing any tasks, but perhaps for example, incurring expense in doing things like travelling to discuss matters relating to the Power of Attorney with the principal, obtaining legal advice where a technical issue has arisen and similar (accepting of course, the principal may include terms in the Powers of Attorney to regulate payment of such expenses)
- the right of the principal to revoke the Power of Attorney, which cannot arise before the Power of Attorney has become effective
What these examples make clear is that “becoming effective” is not a concept which focuses upon the right on the part of an agent to perform tasks might arise.
¶ What Is The Term ‘Binding Upon The Principal’ All About?
The expression “binding upon the principal” is poignantly found in the following phrase:-
“…a Power of Attorney is binding upon the principal upon being properly executed by the principal…”
When we speak of a Power of Attorney becoming binding on the principal, we are talking about the point in time from which the principal agrees to be bound by the terms in the Power of Attorney.
Once the principal demonstrates their intention to be bound by the terms of the Power of Attorney and that point in time arises, from that moment forward the principal is bound by its terms, until such time as the Power of Attorney is revoked or terminates for any other reason.
This means in practical terms, that from the point in time at which the principal wants the Power of Attorney to be binding upon them:-
- the principal may be liable to pay remuneration or expenses to an agent
- the principal may be obliged to indemnify the agent if the agent acquires a liability to a third party in the course of performing tasks on behalf of the principal under the Power of Attorney
- the principal may be obliged to indemnify the agent in respect of loss suffered by the agent in the course of performing tasks on behalf of the principal under the Power of Attorney, for example if the agent was injured whilst performing those tasks
Before a Power of Attorney becomes binding upon the principal, these obligations and liabilities do not and cannot arise.
As a matter of logic, the time at which a Power of Attorney becomes binding upon the principal is the earliest point in time at which an agent might be appointed under the Power of Attorney, accepting that a Power of Attorney may specify some other ‘earliest date’ an agent may be appointed, or otherwise define a term of appointment for an agent.
¶ Options With Respect To Commencement Of A Power of Attorney
Here are some examples of different approaches dealing with commencement of a Power of Attorney:
- immediately upon acceptance of appointment by an agent
- upon a certain future date
- upon the happening of a particular future event
- in the event that an agent considers the principal to be in need of an agent
- in the event that an agent considers the principal to be in need assistance managing their affairs
- in the event that the principal is unable to manage their affairs
¶ Certification of Occurrence of a Contingency
In the Six (6) Greater States, approaches differ with respect to the issue of an agent’s authority to certify matters relevant to commencement.
The certification options in the Six (6) Greater States are addressed on the page of this Wiki titled Certificates & Affidavits.
¶ A Special Word About New York
In New York, 5-1501B provides:
“The date on which an agent’s signature is acknowledged is the effective date of the Power of Attorney as to that agent; provided, however, that if two or more agents are designated to act together, the Power of Attorney takes effect when all the agents so designated have signed such power of attorney with their signatures acknowledged…”