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Expressions like “create a Power of Attorney” or “make a Power of Attorney" may have different meanings, depending upon their context.
The expression may refer to bringing into existence a Power of Attorney that:-
| ..has not been signed by the principal, perhaps to be subject of further deliberation, advice or discarded | is not yet signed |
| ..has been properly executed by the principal and in respect of which no agent has accepted appointment, albeit they may accept appointment in the future. | is signed by the principal |
| ..has been properly executed by the principal and in respect of which an agent has accepted appointment to act as an agent under the Power of Attorney | is signed by the principal & agent |
To create a Power of Attorney, the principal must understand their own affairs and the effect of their actions in creating a Power of Attorney.[1]
For example, in California:-
the expression "capacity to contract" is seen in §4120 and §4155:
§811 discusses the notion of "capacity to contract" at length
It is not a condition of using a Power of Attorney that the principal is unable to be physically present.
A Power of Attorney may be used simply because it is convenient, in circumstances where the principal would merely prefer someone else perform a task on their behalf, despite the principal being otherwise able to perform the task themselves, if they chose to do so.
That is not to say that Powers of Attorney are not sometimes designed to work such that an agent may only perform certain tasks if the principal lacks capacity or the principal is not in a particular location or similar, however these Powers of Attorney are merely possible designs.
What an agent is authorized to do and when is always simply a matter for the principal.
Subject to some state-based exceptions, a minor who has otherwise come of age for legal purposes by virtue of marriage or otherwise may create a Power of Attorney, as might a prisoner.
A bankrupt may be able to create a Power of Attorney, albeit perhaps only for certain purposes.
A military person can create a military Power of Attorney that is fully compliant with all state-based requirements, including any mandatory requirements, without being in writing if necessary, by virtue of special legislation.
Creation of a Power of Attorney by a commercial entity (i.e. a business trading as a company or partnership, a trust or an association etc.) is addressed under the heading Creation Of A Power of Attorney By A Commercial Entity Involves Special Considerations.
A principal may create and sign a Power of Attorney that is intended to be used immediately.
Alternatively, a principal may prefer to:-
The potential placement of Powers of Attorney in safe custody for use in the future is an interesting feature of Powers of Attorney.
Lapse of time provisions in each of the Six (6) Greater States affirm that delay between a principal signing and an agent signing a Power of Attorney does not affect its operation, other than Texas in respect of a non-durable Power of Attorney.[2]
A prudent principal who does not want a properly executed Power of Attorney to remain on foot would ensure that it contains clear terms dealing with termination, absent which an agent may potentially rely upon a Power of Attorney.
Directions and limitations included in a Power of Attorney may deal with its use.
For example, a principal might specify that a Power of Attorney:-
Powers of Attorney are most commonly created in writing as a ‘stand-alone’ document.
It is possible to create a Power of Attorney by other means, such as:-
Creating a Power of Attorney triggers rights, entitlements and obligations arising on the part of the principal, agents and third parties.
The rights, entitlements and obligations arising on the part of the principal, agents and third parties remain subject to the terms of the Power of Attorney read in conjunction with relevant laws.
For example:
A commercial entity (i.e. a business trading as a company or partnership, a trust or an association etc.) must ensure that creation of a Power of Attorney is consistent with any relevant constituting documents.
The creation of a Power of Attorney by a commercial entity should be the subject of a resolution of the members as a record of the commercial entity having resolved to create the Power of Attorney, without which the validity of the Power of Attorney may be disputed.
For example, if an LLP wanted to create a Power of Attorney, it would be important to:-
Similarly, if an LLC, trust, association, corporation or other commercial entity wanted to create a Power of Attorney, the starting point would usually be to review the constituting document (i.e. articles of incorporation) governing the LLC to ensure that the LLC or other kind of commercial entity is authorized to create Powers of Attorney and assuming that is the case, then attach the relevant Power of Attorney to a suitably worded resolution of directors, partners or other relevant officeholders.
In circumstances where the constituting document of a commercial entity does not expressly authorize the creation of Powers of Attorney, the constituting documents should be amended before it is created, to expressly authorize the creation of Powers of Attorney by the commercial entity.
In Florida, there is a prohibition upon the creation of:-
In Florida, the impact of the words “become effective” needs to be considered when creating a Power of Attorney for a person[5].
It seems reasonable to equate the words “become effective” to "becoming binding upon the principal."[6]
Click here for more information about capacity. ↩︎
In a non-durable Power of Attorney under the laws of Texas, it may be prudent for example, to include a suitable direction affirming that any delay between signing of the non-durable Power of Attorney by the principal and any agent will not effect its operation, because legislation does not govern non-durable Powers of Attorney in Texas. ↩︎
Being a Power of Attorney for a person that is not excluded from the ambit of the legislation - [click here] ↩︎
Ibid. ↩︎
Click here to read more. ↩︎