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In oversimplified terms, a durable Power of Attorney is:
..a Power of Attorney that operates according to its terms, irrelevant to whether or not the principal lacks capacity.
If for example, a durable Power of Attorney provides that it terminates on a certain date, or only authorize an agent to perform certain tasks when the principal has capacity, the Power of Attorney will continue to operate according to these terms, if the principal loses capacity.
Whatever a durable Power of Attorney says about when or how it may be used, the terms of a durable Power of Attorney will be applied, without regard to any common law principles that deal with other outcomes associated with the principal losing capacity, for example any common law rule that upon the principal losing capacity the Power of Attorney terminates.
The complete description of the term “durable Power of Attorney” preferred in this Wiki is set out in Part 2: Technical Aspects below.
Durable Powers of Attorney may be used:-
In each instance, a durable Power of Attorney is used to manage the risk that a person loses capacity.
A principal might use a durable Power of Attorney to authorize someone to control their commercial affairs, in the event that the principal loses capacity.
The use of durable Powers of Attorney can be invaluable, in both sophisticated and simpler transactions.
For example, if two persons were arranging the transfer of a home from one to the other, either or both persons may:-
For either person, properly executing a durable Power of Attorney is an important protection, to minimise any risk that an accident or other kind of unpredictable problem somehow prevents them completing the transaction, which could result in them suffering loss, as well as potentially becoming liable to pay damages to another party to the transaction.
As to why it might be prudent if you are entering a transaction with a person to require that person to properly execute a durable Power of Attorney before entering the transaction, having that person properly execute a durable Power of Attorney before entering the transaction ensures that if that other person has an accident or loses capacity for any other reason, the transaction remains capable of being completed on their behalf by their agent or agents appointed under the durable Power of Attorney.
A durable Power of Attorney might be used in simpler transactions.
For example, a Power of Attorney might authorize:-
In a sophisticated transaction:-
In particular, in a sophisticated transaction, a durable Powers of Attorney tend to minimise the risk of liability for damages if a person loses capacity.
Each year in the United States:
Around 60 million people suffering a debilitating injury each year.
3.5 million debilitating injuries involve traumatic brain damage.
Right now, 25 million people are living with a brain related injury, Alzheimer’s disease or mental illness.
1 in 14 people are struggling to take care of themselves.
The risk that you find yourself in need of a Power of Attorney increases with age.
A principal might use a durable Power of Attorney to authorize someone to control their commercial affairs, in the event that the principal loses capacity.
Traumatic events that might give rise to cognitive and physical incapacity include:-
There are good reasons for everyone to consider using a durable Power of Attorney.
With a durable Power of Attorney in place, family are not left without option but to approach a Court for orders permitting them to manage the affairs of a family member who lacks capacity.
For families, incapacity of a loved one is enough to deal with, without having to file and manage legal proceedings to access critical funds, manage family property, perhaps manage claims or entitlements available to their incapacitated relative and similar.
For singles, the consequences of a tragic accident are also troubling, commonly justifying the appointment of professionals, to ensure that their interests are protected if they lose capacity.
For some years, Courts have been presented with cases involving:-
Nonetheless, when we speak of durable Powers of Attorney, we are talking about a relatively new, legislative invention.
The 2010 article Power of Attorney: Convenient Contract or Dangerous Document by Catherine Seal contains a useful, brief account of initiatives which substantially commenced in 1964 to achieve national uniformity in the context of use of durable Powers of Attorney.
In short, the history shows:-
The 1994 California Law Revision Commission Report which led to enactment of Division 4.5 of the Probate Code, stated:
"The statutes governing powers of attorney are in need of reorganization and revision. Since 1979, several bills have been enacted recognizing general durable powers of attorney and durable powers of attorney for health care, providing statutory forms, specifying a procedure for enforcement of the duties of attorneys-in-fact, and making a number of other changes in the law.."
.".the piecemeal nature of the revisions over the past 12 years has resulted in a disorganized set of statutes.. unclear.. obscure and incomplete.. [providing] little practical guidance.."
"The proposed Power of Attorney Law restructures the Power of Attorney statutes and relocates them as a new Division 4.5 of the Probate Code, starting with Section 4000.."
"Durable Powers of Attorney are an increasingly important tool in ordering private affairs, resulting in special legislative attention in several other jurisdictions, as in California.."
"Relocating the Power of Attorney statutes in the Probate Code reinforces the estate planning nature of the durable Power of Attorney, and assists in distinguishing Power of Attorney for personal reasons from Powers of Attorney used in business transactions.."
A durable Power of Attorney is intended to operate at a time when the principal lacks or may lack capacity.
Durable Powers of Attorney are expected to meet difficult challenges and raise sophisticated considerations.
Durable Powers of Attorney involve the balancing of delicate rights and interests as between the principal, agent and any third party, some of which may be hard to decipher.[1]
Unique challenges associated with durable Powers of Attorney include:-
A durable Power of Attorney strives to balance various considerations, including:-
Problems arising from the abuse of a durable Power of Attorney tend to be profound.
It is a cruel twist that an unscrupulous agent who dissipates assets of a vulnerable principal without capacity effectively robs them of the means they might use to ‘right the agent’s wrong' and worse, robs them of the vulnerable principal when they have no capacity to source further resources.
A vulnerable principal might find themselves without means and without ability to source new means, without anyone in their life willing to pursue a claim available to them against the unscrupulous.
It falls to the principal to minimize risks by including checks and balances in their Power of Attorney.
The very nature of a Power of Attorney may frustrate and compound problems when an unscrupulous agent dissipates assets of a vulnerable principal without capacity.
In particular, the duty of confidentiality owed by an agent can play havoc with the efforts of someone trying to resolve whether or not a Power of Attorney has been used improperly.
An agent in a durable setting may assert that the duty of confidentiality they owe to the principal prevents them answering questions, releasing information or providing records to a third party, such as a concerned family member.
Unless a Power of Attorney manages this issue well and is accessible to others, risks tend to increase.
In the context of concerns about the conduct of an agent in a durable setting, family members deserve special consideration.
When the actions of an uncle or brother, niece or child are at stake, no one may be keen to allege impropriety, because it may fracture family relations.
Many family members who become aware of a possibly unscrupulous agent are inherently more likely to say nothing if they feel that to say anything might result in family friction. Moreover, most people are reluctant about going to Court and may not go to Court for themselves, let alone for someone else.
In particular, a family member who has no actual evidence that clearly warrants them going to Court, may be less enthusiastic.
Relying on inexperienced family members, perhaps a brother, uncle or parent to go to Court for the purpose of conducting a set of proceedings for purposes of no immediate benefit to themselves, to raise a case involving a family member being alleged to have engaged in unscrupulous conduct in respect of which outcomes may be uncertain, is often more than might be expected from even the most loving family members.
If a family member find themselves denied access to records by an agent, they might be forgiven for not taking things further.
Even where suspicious or troubling conduct involved, it may yet remain difficult to form a conclusive view that any legal proceedings will be successful, resulting in inaction.
As to preventing the abuse of a Power of Attorney:-
Government forms deserve special mention in this context:-
Users of a government form might benefit from reading the information under the heading Using A Government Form In Conjunction With A Custom Power Of Attorney.
Terms in a Power of Attorney might deal with:-
Both aspects of the design of a Power of Attorney referred to above are important, the first to ensure the agent cannot 'claim confidentiality' and the second to ensure the agent assists.
Suitable arrangements with respect to access to a Power of Attorney typically involve:-
For any principal there is likely to be a balancing exercise involved when deciding how these sorts of arrangements are to work, in particular balancing the importance of access to documents and information and for example, the concern of the principal to keep their affairs private and confidential.
Recognizing the risks associated with family members in a durable setting, it may make good sense to include regular, non-optional audit arrangements.
Anything less may itself be a source of friction between family members.
Regular, non-optional audit arrangements mean:-
Equally consistent with this approach are the interests of the principal in ensuring that their affairs do not unnecessarily end up before a Court, one effect of regular auditing being to reduce the likelihood that anyone 'gets the wrong idea' and rushes into Court unnecessarily, resulting in the principal's affairs being unnecessarily put before a Court, resulting in unpredictable outcomes.
In the context of risk management, New York does things differently.
In New York, a monitor appointed under §5-1509 has a right to inspect “a record of all receipts, disbursements, and transactions.”
Whilst it might be suggested that the role of a monitor be developed further (as discussed further under the heading The Role Of A Monitor May Be Expanded, perhaps subject to expanding the role of a monitor), there are good reasons to appoint a monitor in New York, as a means to minimise problems.
New York is the only one of the Six (6) Greater States to include in their legislation an officeholder with audit functions.
Durable Powers of Attorney are now operating in most American states and other western countries.
The world paints an interesting picture in its efforts to manage issues associated with durable Powers of Attorney.
At one extreme, we have Louisiana and South Africa, where governments are yet to pass legislation authorizing the creation of durable Powers of Attorney.
At another extreme, we have the United Kingdom and the Northern Territory of Australia where the equivalent document to a Durable Power of Attorney in America must be created using a government form:-
Then we have Illinois, where legislation goes as far as to permit a principal to "specify in the agency the event or time when the agency will begin and terminate, the mode of revocation or amendment and the rights, powers, duties, limitations, immunities and other terms applicable to the agent and to all persons dealing with the agent, and the provisions of the agency will control notwithstanding [the legislation]..." , the notion of a Power of Attorney being capable of defining rights, powers, duties, limitations and immunities applicable to a third party being novel in comparison for example, to the other five (5) of the Six (6) Greater States.
In further contrast, there are states with very scant legislation, for example Arizona (see Chapter 5 Article 5) and the District of Columbia (see Title 21, Chapter 21).
These experiences demonstrate a very wide variety of approaches across the globe.
In Recommendations made by the Uniform Laws Commission (ULC) in 2006, the ULC promotes an approach whereby all Powers of Attorney are recognized as durable, unless the Power of Attorney expressly provides that it terminates upon the principal losing capacity.
In the 2006 ULC Recommendations:-
The ULC approach has been adopted somewhat wholeheartedly in New York.
By contrast, California, Texas and Florida continue to follow the more traditional approach, requiring the inclusion of an expression of durable preference in a durable Power of Attorney.
Illinois and Pennsylvania have preferred an approach closer to the ULC approach, in particular obviating any need for inclusion of an expression of durable preference in a durable Power of Attorney.
The ULC approach:-
The ULC approach does not remove capacity at the time of creating the Power of Attorney as a live issue.
A prudent principal might want to maintain suitable medical evidence affirming their capacity at the time they executed the Power of Attorney.
Unrestricted power to delegate our affairs in any terms we see fit is an important human right.
For example:-
In the context of goverments defining what options are available when creating a Power of Attorney, any public interest in ‘avoiding complexity' must be balanced against the importance of ensuring that we are freed to structure our affairs however we see fit.
It is hard to imagine anyone else being as well placed as ourselves to know what is best, in terms of protecting our interests if we lose capacity, that is, in terms of deciding who should assist, what conditions should control their appointment, whether they should perform some tasks by agreement with someone else, what directions and limitations should be apply and similar.
Rather than for example, prescribing that sub-agents cannot be appointed, governments might look to impose various 'by default, safety net terms', that is, rules that apply if the principal does not express a preference, for example rules dealing with the right of agents to appoint sub-agents which only apply if the Power of Attorney is silent about this issue.
Within the Six (6) Greater States, Illinois is the only state to use language of the following kind in its legislation, being language that really emphasizes freedom on the part of a principal to construct a Power of Attorney however they see fit.
§2-4 in Illinois states:-
“..[t]he General Assembly recognizes that each individual has the right to appoint an agent to make property [and] financial.. decisions for the individual..
..[t]he principal may specify in the agency the event or time when the agency will begin and terminate, the mode of revocation or amendment and the rights, powers, duties, limitations, immunities and other terms applicable to the agent and to all persons dealing with the agent, and the provisions of the agency will control notwithstanding this Act.." (§2-4)
This follows on from §2-1, which provides:-
“The General Assembly recognizes that each individual has the right to appoint an agent to make property, financial, personal, and health care decisions for the individual but that this right cannot be fully effective unless the principal may empower the agent to act throughout the principal's lifetime, including during periods of disability, and have confidence that third parties will honor the agent's authority at all times..”
None of the five other of the Six (6) Greater States have words like these words (above) in Illinois in their legislation.
A document which only exists because it is prescribed by legislation, is often called a ‘creature of statute'.
A durable Power of Attorney is such a document.
The user of a durable Power of Attorney:-
Beyond the legislation, other matters are typically uncertain, because:-
With respect to the possibility of a future without the distinction between durable and non-durable Powers of Attorney:-
if the approach taken in the 2006 ULC Recommendations were adopted nationally, all Powers of Attorney would be presumed to be durable unless they state otherwise (see §102):-
in practical terms this would mean for example, that a Power of Attorney not stated to be either durable or non-durable, would be durable, unless the Power of Attorney expressly provided that it terminated upon the incapacity of the principal
perhaps the objective at stake would be better served if §102 read ““Durable,” with respect to a Power of Attorney, means not terminated, suspended, deemed voidable or otherwise qualified in its operation by any common law principle, as a consequence of the principal’s incapacity”, the significance of which is explained in Part 2: Technical Aspects below
if we were to recouch the language applicable to Powers of Attorney so as to recognize a Power of Attorney as simply what is today known as a durable Power of Attorney, we would have removed the need to speak of durable and non-durable Powers of Attorney, other than perhaps in circumstances where a person prefers that their Power of Attorney succumb to any consequence at common law, if the principal loses capacity
from there, we would be remarkably close to removing the distinction altogether, particularly if it were concluded in favour of a durable Power of Attorney being able to be cast that terminated if the principal preferred, or perhaps was suspended if the principal prefers etc.
under the heading Can A Durable Power Of Attorney Terminate At The Moment The Principal Lacks Capacity? the question of whether a durable Power of Attorney can be created that terminates upon the principal losing capacity is examined
if the answer to that question is yes, it seems there is a real possibility that in the future, we could remove the distinction between durable or non-durable completely in the future, in favour of a better appreciation of durable Power of Attorney being a creature of intention, nothing else and accordingly, capable of being cast in any terms, as long as the intention is to cast the Power of Attorney as durable, evidenced by compliance with any mandatory requirements and in particular, intended to be governed by the legislative regime
In New York or Florida, the need for distinction is less than in other states, because legislation typically applies equally, irrelevant to whether a Power of Attorney is durable or non-durable.
For example, the third party enforcement regimes in New York and Florida are accessible whether or not a durable or non-durable Power of Attorney is used, whereas in Texas for example, the third party enforcement regime is only accessible in respect of a durable Power of Attorney
Typically, the distinction tends to affect:-
Anyone focused on removing the distinction between durable and non-durable Powers of Attorney would probably embrace uniform mandatory requirements, dealing with issues like required wording, font size, inclusion and content of relevant notices and similar.
Establishing uniform mandatory requirements is likely to remain particularly difficult for as long as some states (i.e. California, Texas and Florida) require inclusion of an expression of a durable preference in a durable and other states (i.e. New York, Illinois and Pennsylvania) impose no such requirement.
It may be that a future is possible where:-
If the term “durable” is needed, it seems preferable to adopt an approach to its meaning that:-
This approach importantly tends to remove confusion associated with reference to the notion of termination, accepting that:-
It may be of particular advantage to a person in Texas to cast a Power of Attorney as a durable Power of Attorney.
That is not to say that use of durable Power of Attorney in California, New York, Florida, Illinois and Pennsylvania is not advantageous. It is only that in Texas, more relief and remedies are available where a durable Power of Attorney is used.
For example in Texas, casting a Power of Attorney as a durable Power of Attorney entitles the principal and their agents to rely on third party enforcement regime.
California, New York, Florida and Pennsylvania also have a third party enforcement regime, however in these four (4) states the third party enforcement regime is accessible whether or not a Power of Attorney is durable.
As to why Illinois does not have a third party enforcement regime one possible explanation is cited under the heading A Special Word About Illinois.
Perhaps the reason that Texas takes the approach it has because it recognizes any Power of Attorney may be cast as a durable Power of Attorney and for reasons of the kind discussed under the heading Do We Really Need Durable And Non-Durable Powers of Attorney, a view is preferred that in fact, any Power of Attorney may be cast as a durable Power of Attorney.
One of the more difficult aspects associated with the notion of capacity in the context of use of Powers of Attorney is the reality that capacity can and often is, changing.
It is all too easy to wildly assuming in any discussion of durable and non-durable Powers of Attorney that at all times, we are easily certain whether or not a principal either has capacity or lacks capacity.
In reality, capacity is often partial and changing over time.
There are probably a good proportion of cases each year in every state where the capacity of a principal is borderline, for example a patient measuring close to 10 on the dementia scale, half way from a full score of 20 and yet demonstrating cognitive ability, albeit their capacity may be deteriorating.
Beyond the issue of changing capacity, it might be fair to ask why there is a preponderance to focus upon the broader question of whether a principal lacks capacity, as opposed to perhaps the more pertinent question of whether the principal lacks capacity to perform the specific tasks authorized to be performed under the Power of Attorney.
It seems fair to say:-
It may be interesting to recognize that in California, the concept of incapacity is defined in more detail and for example, §811 includes (bold added):-
“In determining whether a person suffers from a deficit in mental function so substantial that the person lacks the capacity to do a certain act, the court may take into consideration the frequency, severity, and duration of periods of impairment..”
None of the other Six (6) Greater States have a similar provision in their legislation.
The difficulties associated with this issue represent the strongest argument in favour of durable Powers of Attorney that authorize an agent to perform tasks whether or not the principal has capacity, being a design that:-
When crafting a Power of Attorney, it is worth considering that, for example:-
Mandatory requirements vary from state to state:-
| New York, Illinois & Pennsylvania | A Power of Attorney for a person[3] is durable unless it provides otherwise. Durable and non-durable Powers of Attorney are subject to the same requirements with respect to execution, inclusion of mandatory notices etc. (i.e.the same for both durable and non-durable Powers of Attorney in each of these states, these requirements differing between the three (3) states). |
| California | A person[4] who is creating a durable or non-durable Power of Attorney largely must comply with the same mandatory requirements with respect to execution, although a person[5] creating a durable Power of Attorney must also include a mandatory notice (§4128) and expression of durable preference, which are not requirements applicable to a non-durable Power of Attorney. |
| Texas | There are no requirements imposed by legislation in respect of a non-durable Powers of Attorney. A person[6] creating a durable Power of Attorney must comply with certain mandatory requirements, including the inclusion of an expression of durable preference. |
| Florida | A person[7] creating a Power of Attorney must comply with the certain mandatory requirements, including the inclusion of an expression of durable preference in a durable Power of Attorney. |
Vexed issues can arise where a Power of Attorney for a person[2] fails to comply with mandatory requirements.
Failure to execute a Power of Attorney for a person[3] before suitable witnesses or include required words may put a Power of Attorney in an impossible position.
It may be untenable to give effect to its contents, because it does not satisfy mandatory requirements that are referable to a durable or non-durable Power of Attorney, whichever be applicable.
For example, where it is clear from the terms of a Power of Attorney provide for an agent to perform certain tasks only if the principal lacks capacity, if the Power of Attorney does not satisfy the mandatory requirements applicable to a durable Power of Attorney, a Court may be in difficulty accepting that the Power of Attorney has any effect.
Outcomes in these kinds of cases may vary. Courts typically have wide discretion to grant relief.
The risk that a Power of Attorney for a person[26] is deemed void ab initio for failing to comply with mandatory requirements or given an effect by a Court that was not intended by the principal highlights the importance of ensuring that due consideration is given firstly to whether a Power of Attorney is durable or non-durable and secondly, whether the appropriate mandatory requirements complied with.
It is surprising how many people would erroneously account for a durable Powers of Attorney as ‘a Power of Attorney that appoints an agent to act if the principal lacks capacity’.
In fact, what determines whether a durable Power of Attorney is durable is irrelevant to when an agent is authorized to do anything.
What matters is what the principal intends if the principal loses capacity, in terms of whether the arrangements in the Power of Attorney are to continue to be effective.
It may not always be acknowledged that things work differently in the Six (6) Greater States:-
This fundamental divide between these two groups of states is a good example of their differences, accepting there are many differences.
If a principal only authorizes agents to do things at a time or different times in the future when the principal has capacity, this does not mean:-
Any determination of whether the Power of Attorney is non-durable or durable turns upon what the principal intends if the principal loses capacity, in terms of whether the arrangements in the Power of Attorney are to continue to be effective:-
Of course, if an agent was only authorized to perform tasks when the principal lacks capacity, the position would be different.
Determining in this manner whether a Power of Attorney is non-durable or durable does not involve any need for determination of capacity, the sole focus of inquiry being the intention of the principal.
Any need to determine capacity of the principal could only be a secondary issue, such that the question of capacity might be:-
The Case Study titled The Mentally Ill illustrates use of a durable Power of Attorney only authorizing agents to perform tasks when the principal has capacity.
Lesser descriptions of “durable” than those cited above are not helpful. For example, consider the following alternatives.
This description:-
This description:-
The fundamental problem associated with durable Powers of Attorney is a resource problem.
You would readily believe someone who said to you, “I am not particularly willing to go out on a limb and perform many hours of work including spending many hours with lawyers, taking risks in relation to costs unless it is for myself” and “you can never be sure that if you lost capacity and someone steals your money, someone else would do everything necessary to recover the monies”.
A vulnerable principal is seriously at risk of losing everything, with poor prospects of recovery, because unlike any other person, a vulnerable principal may not be able to act for themselves, perhaps not even be aware anything is wrong.
It is often said this is a complex problem, however it is solvable.
An injection of resources to ensure a vulnerable principal is not abused is required and in principle, this seems achievable. Whether or not we choose to adopt such an approach is an entirely different question.
Below under the heading A New Kind Of Insurance Scheme is one idea that might work to solve the fundamental problem.
This idea simply demonstrates that in principle, there may yet be strong solutions and we should look for the best solution.
We must not become complacent and accept risks as some sort of ‘cost of using a durable Power of Attorney’.
There must be a way to make durable Power of Attorney work better.
Consider this approach:-
Consideration would need to be given to many issues, such as ensuring that the insurer honours the policy and the importance of obtaining supportive legal opinion as to prospects for success and recovery, before pursuing any claim.
It is not necessary to dive further into the minutiae of this sort of arrangement.
Consider the impact upon the number of incidents involving abuse of Powers of Attorney if government forms included provision to the following effect:-
In fairness, New York (§1509) has included something akin to these arrangements in its legislation by at least defining the role of a monitor and including space in the government form to identify them.
None of the remaining five (5) of the Six (6) Greater States have preferred to address this issue in legislation.
Even in New York where a monitor can be appointed, it is fair to say that there are a raft of other measures that might form part of risk management modelling in respect of a durable Powers of Attorney.
Equally, a principal might consider the advantages of the kind of arrangement discussed in this Wiki under the heading Appointing Family Members As Managers, involving family members having roles as agents with authority limited to each appoint a sub-agent, being a professional.
It seems the greatest perceived drawback with arrangements involving regular review is cost.
It may be that part of the future solution is the development of purpose built accounting packages, like Xero, specially designed to deal with an agents accounts, allowing agents to use accounting practices, processes and services that significantly reduce the cost of external accounting review, because records are created in perfect order.
Surely the answer is to leave cost considerations to the principal and make audit arrangements ‘conveniently optional' by at least having a ‘box to tick’ on the government form, accepting that only New York has included some measure in their government form (see monitors).
Further commentary is found under the heading Improving Government Forms.
In this Wiki, the following approach to durable Powers of Attorney is preferred.
¶ At Common Law
At common law, the agency relationship and the agent's authority to act are terminated on the death, bankruptcy or incapacity of the principal.[4]
Consequently, to create a Power of Attorney that does not terminate on the incapacity of the principal, legislation is required.
¶ Where
All of the Six (6) Greater States have passed legislation recognizing the right of a person to create a durable Power of Attorney.
¶ Requirements
A durable Power of Attorney must not be for a purpose that is excluded from the ambit of the legislation.
A durable Power of Attorney must comply with certain mandatory requirements.
¶ Exclusions and Mandatory Requirements
Relevant exclusions and mandatory requirements are imposed under the legislation of each of the Six (6) Greater States.
The exclusions and mandatory requirements in any of the Six (6) Greater States may be the same as or different to the exclusions and mandatory requirements in any of the other Six (6) Greater States.
¶ Legislation
In 1954, Virginia, was the first state to allow a Power of Attorney to continue beyond the principal's incapacity.[5]
¶ Estate Planning Purposes
The durable Power of Attorney is most commonly used to handle the affairs of an incapacitated person without court supervision.
¶ Business Purposes
Any person undertaking a substantial transaction of any kind, in particular a transaction that might result in a claim for damages in the event the person does not fulfil their side of the contract (i.e. a contract to buy a house, purchase a business etc. sell certain property etc.) or who engages in these kind of transactions from time to time, would be well placed to create a durable Power of Attorney.
If you are entering such a transaction with a person, you my prefer that the person you are doing business with properly executes a durable Power of Attorney authorizing an agent to complete the transaction on their behalf, if they lose capacity.
¶ Examples of Designs
A durable Power of Attorney might authorize an agent to act after a certain future date, if the principal lacks capacity, or upon as the happening of an event, such as a birth or adoption of a first child, marriage or someone's death and thereafter operate if the principal lacks capacity.
A durable Power of Attorney might authorize an agent to act between two dates in the future:-
if the principal lacks capacity between those two dates, without authorizing the agent to act before the earliest of those two dates even if the principal lacks capacity
whether or not the principal lacks capacity between those two dates and authorize the agent to act before the earliest of those two dates, if the principal lacks capacity earlier in time
A durable Power of Attorney might for example, authorize an agent to act before a certain date whether or not the principal lacks capacity and only after that date if the principal has capacity, or perhaps only if after that date if the principal lacks capacity etc.
Even a durable Power of Attorney that authorize an agent to act if the principal lacks capacity raises design considerations, such as considerations for the purpose of determining capacity, which might be a matter, for example:-
- determinable by an agent
- requiring a doctor to furnish a report confirming that the principal lacks capacity
- be assigned for determination by multiple agents jointly, or by majority
- certified by an agent
There are lots of possible designs, although perhaps using the simplest design is best employed by anyone wanting to keep their affairs as simple as possible, for example ensuring that where a Power of Attorney operates between two future dates, during the period between the two dates, the agent may act whether or not the principal lacks capacity.
More sophisticated designs of durable Powers of Attorney for example, might authorize an agent or different agents to perform different tasks, or certain tasks differently, depending upon whether the principal has or lacks capacity.
¶ Simplest Design
The simplest design is a durable Power of Attorney that authorize an agent to act whether or not the principal lacks capacity, from the moment that the principal properly executes the Power of Attorney.
This simple design substantially removes the need to consider whether or not the principal lacks capacity (other than at the time that the Power of Attorney is properly executed by the principal, reducing the possible need to consider medical evidence in the context of a dispute about the Power of Attorney and for example, ensuring an agent is always confident that they have authority, without regard to the principal's capacity.
¶ Nuances In The Six (6) Greater States
Things work differently in the Six (6) Greater States.
Florida
Florida has prohibited Powers of Attorney that “become effective” in the future (see §2201(1).
This is interesting because:-
- Florida does not have a government form which might shed light on the implications of this limitation
- Florida does not appear to prohibit the use of a Power of Attorney that is immediately binding upon the principal and authorizes an agent or different agents to perform certain tasks until some future point in time
- a Power of Attorney designed to authorise the performance of particular tasks at some future point in time in Florida might usefully include some innocuous task in such a Power of Attorney that may be performed forthwith upon the Power of Attorney being properly executed by the principal, making clear that for example, that all other tasks authorized to be performed by an agent or different agents under the Power of Attorney may only be performed at a later, nominated point in time, to minimise the risk that a poor approach is taken by someone to §2201(1), which might otherwise compromise the operation of such a Power of Attorney.
California
Texas
New York
Illinois
Pennsylvania
Accepting that the description above is in two parts, depending upon whether the Power of Attorney is intended to be effective immediately, it is purposeful to consider that unless a different intention is recorded in a Power of Attorney, a Power of Attorney is presumed to be intended by the principal to be effective upon being properly executed by the principal.
An expression of a different intention might involve words being included in a Power of Attorney along the lines of:-
"This Power of Attorney will be binding upon me, the principal, on and after .[insert date or event]..."
Another variation might be:
"This Power of Attorney will commence to be effective upon..[insert date or event].."
Unless words of this kind are found in a Power of Attorney (or perhaps evidence of some contrary intention is found elsewhere) it is likely to be assumed that a Power of Attorney is intended to be binding upon the principal (i.e. effective) immediately upon being properly executed by the principal.
The expression "at common law" is used to refer to the position at law, if any relevant legislation is ignored.
It is a useful expression, because legislation often operates to modify the common law and so, if we wish to make clear we are talking about the law "as it was" prior to introduction of any relevant legislation, the expression "at common law" makes this clear.
Where legislation is introduced that modifies the common law, it seems reasonable to describe such legislation as remedial, accepting views may differ.
The notion of remedial legislation is discussed in articles like Remedial Legislation by Rudolph H. Heimanson (1968); Statutory Interpretation: General Principles and Recent Trends by Larry M. Eig (2014), Interpretation of Statutes in Derogation of the Common Law by Jefferson B. Fordham and Russell J. Leach (1950)
In those articles, there is reference to "the equally familiar rule that statutes which are procedural or remedial, in the strict sense, should be liberally construed.."[6]
As to what precisely represents the common law with respect to the consequences of the principal in respect of a Power of Attorney losing capacity, it is fair to say:
These conclusions flow from a review of articles like Does The Agency Die When The Principal Becomes Mentally Incapacitated? by Alfred Mukatis (1983); Incompetent Principals, Competent Third Parties, and the Law of Agency by, Alexander Meiklejohn (1986); and A Theory of Agency Law by Paula J Dalley (2011), in which the consequences of incapacity are discussed in detail, including recognition of debate about matters like:-
In California, New York and Florida, the following provisions appear to prescribe a consequence (i.e. termination) where a principal in respect of a Power of Attorney that is not excluded from the ambit of the legislation loses capacity and the Power of Attorney has not been cast as a durable:-
As to the different approaches in the Six (6) Greater States:-
It seems on any view, these provisions are not intended to be an exclusive account of reasons for termination, which might also include for example:[7]
Perhaps a more interesting question may be whether these provisions in California, New York and Florida are intended to:-
Other interesting considerations might arise in California, where legislation speaks of termination of the authority of an agent, rather than termination of the Power of Attorney.
This is perhaps more interesting given that the legislation of California does not speak of termination of a Power of Attorney where no agent is appointed.[8]
It cannot be said that every Power of Attorney that terminates at the same time that the principal loses capacity is not a durable Power of Attorney.
A Power of Attorney may terminate for unrelated reasons that coincide in time.
It might be said that:-
Recognizing for example, that a Power of Attorney the principal prefers not be suspended if they lose capacity as a durable Power of Attorney is a good starting point for perhaps answering this question.
If a principal can prescribe a preference as to possible suspension of their Power of Attorney if they lose capacity, why should they not be entitled to express a preference as to termination?
Why should there be a difficulty with:-
The concepts of durable and non-durable might well be brought together in this way and there seems little reason not to legislate to accommodate this approach.
There is a divide in approaches in terms of how a person[9] creates a durable Power of Attorney:-
More is said about the 'requisite statutory expressions' in California, Texas and Florida under the heading Requirement For Expression of Durable Preference - California, Texas & Florida below.
The following extract represents the first part of the description of durable Powers of Attorney above:
¶ A durable Power of Attorney[13] that is immediately effective:-
- must comply with all relevant mandatory requirements; and
- if it complies with the mandatory requirements (either specifying in the Power of Attorney that it is intended to continue to operate if the principal loses capacity in California, Texas or Florida) or perhaps omitting any expression of a contrary intention in New York, Illinois or Pennsylvania):-
- is not terminated, suspended, deemed voidable or otherwise qualified in its continuing operation solely upon its terms if the principal loses capacity; and
- is effective at the time that the principal loses capacity and at all times thereafter in accordance with its terms
*The words “in accordance with its terms” are important to recognize for example, the principal says might the Power of Attorney terminates if the principal loses capacity and some other requirement is satisfied (i.e. a certain person is alive, residing in the same state or similar, perhaps that they remain married to a sibling etc) and so, a Power of Attorney may in fact potentially terminate if the principal loses capacity, if other requirements are satisfied.
Until a Power of Attorney has become binding upon the principal:-
In Florida, legislation (§709.2108(3)) prohibits a Power of Attorney for a person[14] that"becomes effective" at a future point in time.
California, Texas, New York, Illinois & Pennsylvania expressly recognize Powers of Attorney may be intended to be effective in the future:-
| California | §4030 provides: ""..springing Power of Attorney” means a Power of Attorney that by its terms becomes effective at a specified future time or on the occurrence of a specified future event or contingency, including, but not limited to, the subsequent incapacity of the principal.." and “..a springing Power of Attorney may be a durable Power of Attorney or a nondurable Power of Attorney.." |
| Texas | Texas expressly recognizes the right to create a durable Power of Attorney that is springing (§751.203) albeit only in the context of the terms of certain certifications, without defining the term “springing Power of Attorney” or addressing the concept in direct terms in legislation |
| New York | 5-1501B provides "If the Power of Attorney states that it takes effect upon the occurrence of a date or a contingency specified in the document, then the Power of Attorney takes effect only when the date or contingency identified in the document has occurred.." |
| Illinois | §2-3 provides “the principal may specify in the agency the event or time when the agency will begin or terminate..” |
| Pennsylvania | §5606 provides: "As to acts undertaken in good faith reliance thereon, an affidavit executed by the agent under a power of attorney stating that he did not have at the time of exercise of the power actual knowledge of the termination of the power by revocation, death or, if applicable, disability or incapacity or the filing of an action in divorce and that, if applicable, the specified future time or contingency has occurred, is conclusive proof of the nonrevocation or nontermination of the power at that time and conclusive proof that the specified time or contingency has occurred.." |
The common law providing for termination, suspension and other outcomes associated with the principal losing capacity applies to Powers of Attorney that are intended to become effective immediately upon the principal losing capacity.
However, do these common law principles also apply to a Power of Attorney that is intended to become effective at a future point in time?
Potentially, if such common law principles are applicable to Powers of Attorney that is intended to become effective at a future point in time, the applicable common law principles may vary, depending upon whether a Power of Attorney:-
It seems easier to accept that the common law applicable to Powers of Attorney intended to become effective immediately also applies to Powers of Attorney that are intended to become effective at a future point in time in circumstances where the Power of Attorney has become effective at the time that the principal loses capacity, given the position is somewhat tantamount to the position in respect of a Power of Attorney that intended to become effective immediately, in the sense that at the time the issue arises, the Power of Attorney is effective.
It may be harder to accept that common law applicable to Powers of Attorney that are intended to become effective immediately also applies to Powers of Attorney that are intended to become effective at a future point in time, where that future point in time has not passed when the principal loses capacity.
In those circumstances, the document at stake is unusual.
On one view, such a Power of Attorney does not represent a set of terms that the principal intends to be binding upon the principal and as a set of terms that have not begun to operate, how can they be ended?
How does the common law accommodate the common law rule that provides for termination upon the principal loses capacity, in circumstances where the Power of Attorney has never started?
Consider, for example that:
Presumably, it may be questions of this kind that led to Florida prohibiting Powers of Attorney for a person[15] that are said to "become effective" at a future point in time.
As to whether there is common law dealing with what happens to a Power of Attorney that has not yet become effective where the principal loses capacity:-
Clearly, all of the Six (6) Greater States except Florida recognize the right to create a Power of Attorney that becomes effective at a future point in time, although it might be said:-
this right only arises under legislation, such that:-
this right exists at common law, such that in Texas, California, New York, Illinois or Pennsylvania, any Power of Attorney may be said to become effective at a future point in time
Anyone contemplating the creation of a Power of Attorney that becomes effective at a future point in time, which is either: (a) not durable (and not for an excluded purpose) in Texas; or (b) for an excluded purpose in California, New York, Illinois or Pennsylvania would be well advised to consider the risk that their Power of Attorney be concluded to be ineffective, or otherwise subject to some outcome that the principal does not prefer, if the right to create a Power of Attorney that becomes effective at a future point in time only arises under legislation.
The following seems to be a fair account of the position in in California, Texas, New York, Illinois and Pennsylvania with respect of a durable Power of Attorney[16] that is intended to be effective in the future:
¶ A durable Power of Attorney[17] that is intended to become effective in the future:-
- must comply with all relevant mandatory requirements; and
- if it complies with the mandatory requirements (either specifying in the Power of Attorney that it is intended to continue to operate if the principal loses capacity in California, Texas or Florida) or perhaps omitting any expression of a contrary intention in New York, Illinois or Pennsylvania), is not terminated, suspended, deemed voidable or otherwise qualified in its continuing operation solely upon its terms if the principal loses capacity, whether or not the principal loses capacity before or after the future point in time when the Power of Attorney is intended to become effective
*The words “solely upon its terms” are important to recognize for example, the principal says might the Power of Attorney terminates if the principal loses capacity and some other requirement is satisfied (i.e. a certain person is alive, residing in the same state or similar, perhaps that they remain married to a sibling etc) and so, a Power of Attorney may in fact potentially terminate if the principal loses capacity, if other requirements are satisfied.
As noted above under the heading Casting A Power of Attorney As A Durable Power of Attorney there are two approaches to creating a durable Power of Attorney.
In New York, Illinois and Pennsylvania, there is no requirement to evidence such a preference on the part of the principal in a durable Power of Attorney,[18] a Power of Attorney being assumed to be intended by the principal to be durable, unless it provides otherwise.
There is no need to include an expression of durable preference.
In California, Texas and Florida:-
The expressions of durable preference in California, Texas and Florida are:
| State | Expression of Durable Preference |
| California | This Power of Attorney shall not be affected by subsequent incapacity of the principal OR This Power of Attorney shall become effective upon the incapacity of the principal (§4124) |
| Texas | This Power of Attorney is not affected by subsequent disability or incapacity of the principal OR This Power of Attorney becomes effective on the disability or incapacity of the principal (§751.0021) |
| Florida | This durable Power of Attorney is not terminated by subsequent incapacity of the principal except as provided in Chapter 709, Florida Statutes (§709.2104) |
In California and Texas there are two slightly different alternatives:-
Florida presumably does not recognize the second formula of words because of the prohibition in Florida upon creating Powers of Attorney that "become effective" at a future point in time (§709.2108(3)).
It might be said that the required intention in California, Texas and Florida is confined.
That is, what is required is only a preference on the part of the principal that their Power of Attorney[21] not terminate (or be suspended or become voidable) at common law at the first moment that the principal loses capacity.
The purpose of expressing the relevant intention appears to go no further than overcoming any common law rule which might result in the Power of Attorney terminating (or being suspended or becoming voidable) at the precise moment that the principal loses capacity, if the principal loses capacity in the future, leaving the principal to otherwise define when the Power of Attorney will terminate as they see fit.
A prudent principal would evidence this intention seizing upon words along the lines of the expression of durable preference cited in the legislation of the relevant state.
This would be correct if the rule at stake was simply that a Power of Attorney terminates upon the principal losing capacity, which cannot occur twice and so, upon the first occurrence of incapacity the opportunity to ever need to consider the position at any subsequent point in time is lost.
As to what might be said against this notion, the starting point is to recognize the position is not the same where for example, a Power of Attorney is found to be suspended upon the principal losing capacity.
If suspension be a consequence at common law, it is possible that suspension may occur on more than one occasion and consequently, the requisite intention is not usefully confined to the first moment the the principal loses capacity, but rather should be tied to “any time” at which the principal lacks capacity, so to speak.
An expression of durable preference is not required to be expressed in perpetual terms.
That is, there is no requirement that the principal intends the Power of Attorney to continue ad infinitum (i.e. forever into the future).
Where a Power of Attorney says it does not terminate at the moment that the principal losing capacity, it might yet say that:-
What matters is that it is clear that the principal intends that the Power of Attorney not terminate or suffer any other common law consequence, importantly at the first moment that the principal lacks capacity and subsequently, where any common law consequence may arise at any subsequent point in time, if this be possible.
A durable Power of Attorney[22] might provide that it authorizes agents to perform tasks:-
Perhaps a durable Power of Attorney[23] is being used:-
It doesn't matter when or how the Power of Attorney authorizes tasks to be performed, or what remuneration, good faith defences or conditions of appointment it includes.
All that matters is that principal intends that the Power of Attorney[24] will not terminate at any moment that the principal loses capacity, entitling the principal to assume:
To determine the principal's intention, we need not look further than to confirm that the Power of Attorney:-
If these requirements are satisfied, it seems the principal's intention is to create a durable Power of Attorney
See the Case Study - Mental Illness and Case Study - Further Examples of Durable Powers of Attorney for examples of durable Powers of Attorney.
In the context of durable and non-durable Powers of Attorney, the following issues are worthy of discussion.
By focusing on this point in time, the reader of a Power of Attorney applies their mind to the pertinent consideration.
It is this point in time that is affected by the 'common law rule' sought to be abrogated by the legislation, accepting that:
A consistent practice of using the term "effect" in all its shades (i.e including "effective", "effectiveness" etc.) when dealing with the concepts at stake is important.
Using other terminology, like "continuing operation", "being on foot", "being operational" and similar which might do the same work as expressions like "continuing to be effective" or "being effective" and similar, however:-
It is not possible to create a Power of Attorney[25] that "becomes effective" at a future time in Florida: §709.2108(3).
One incident of the legislation of Florida is that:-
The description of a durable Power of Attorney above does not focus upon the capacity of the principal, only the principal's intention.
This is discussed in more detail under the heading Purpose for Power of Attorney Is Irrelevant - Only Preference Matters above.
The words “other than according to its terms” are important in the description of a durable Power of Attorney above because they acknowledge that:-
In all of the Six (6) Greater States there is a distinction drawn between durable and non-durable Powers of Attorney for persons.
Putting aside for a moment exactly how the dividing line is drawn, it is clear that the distinction often has consequences.
A single set of words in a Power of Attorney may not be definitive when determining if a Power of Attorney for a person is durable or non-durable.
For example, a Power of Attorney might contain provisions that read on their own justify the conclusion that the Power of Attorney is or is not durable, when upon a reading of the Power of Attorney as a whole, the alternative conclusion is justified.
Unlike any of the other five (5) of the Six (6) Greater States, the legislation of Texas includes §751.003 which provides:
"This subtitle shall be applied and construed to effect the general purpose of this subtitle, which is to make uniform to the fullest extent possible the law with respect to the subject of this subtitle among states enacting these provisions.."
If the approach to durable and non-durable Powers of Attorney set out in this Wiki is a cogently universal for the Six (6) Greater States, §751.003 in Texas may support this approach being adopted in Texas, even if it does not accord with the law of Texas as it was prior to 2018, when §751.003 was enacted.
Similar to Texas and Florida, in California an expression of durable preference is required to be included in a durable Power of Attorney[26].
§4018 provides that a durable Power of Attorney[27] is a Power of Attorney that satisfies the requirements of durable in §4124.
§4124 requires inclusion of certain words:-
"A durable power of attorney is a power of attorney by which a principal designates another person as attorney-in-fact in writing and the power of attorney contains any of the following statements:
(a) “This power of attorney shall not be affected by subsequent incapacity of the principal.”
(b) “This power of attorney shall become effective upon the incapacity of the principal.”
(c) Similar words showing the intent of the principal that the authority conferred shall be exercisable notwithstanding the principal's subsequent incapacity."
§4124 states:
"A durable power of attorney is a power of attorney by which a principal designates another person as attorney-in-fact in writing and the power of attorney contains any of the following statements:
(a) “This power of attorney shall not be affected by subsequent incapacity of the principal.”
(b) “This power of attorney shall become effective upon the incapacity of the principal.”
(c) Similar words showing the intent of the principal that the authority conferred shall be exercisable notwithstanding the principal's subsequent incapacity."
Legislation refers variously to non-durable Powers of Attorney and says in §4155:-
"..the authority of an [agent] under a nondurable Power of Attorney is terminated by the incapacity of the principal to contract.."
§4022 provides:-
"A power of attorney may be durable or nondurable.."
§4030 provides:-
“..a springing Power of Attorney may be a durable Power of Attorney or a nondurable Power of Attorney.."
"..springing Power of Attorney” means a Power of Attorney that by its terms becomes effective at a specified future time or on the occurrence of a specified future event or contingency, including, but not limited to, the subsequent incapacity of the principal.."
It might be said the description of durable is more a method and approach to creation than a description.
Similar to California and Florida, in Texas an expression of durable preference is required to be included in a durable Power of Attorney[28].
§751.002 states:
"(4) “Durable power of attorney” means a writing or other record that complies with the requirements of §751.0021(a) or is described by §751.0021(b)."
§751.0021 requires inclusion of certain words:-
"An instrument is a durable power of attorney for purposes of this subtitle if the instrument..
(3) contains:
(A) the words:
(i) “This power of attorney is not affected by subsequent disability or incapacity of the principal”; or
(ii) “This power of attorney becomes effective on the disability or incapacity of the principal”; or
(B) words similar to those of Paragraph (A) that clearly indicate that the authority conferred on the agent shall be exercised notwithstanding the principal's subsequent disability or incapacity.."
§751.002 states:
"(4) “Durable power of attorney” means a writing or other record that complies with the requirements of §751.0021(a) or is described by §751.0021(b)."
The legislation in Texas only relates to durable Powers of Attorney[29] and makes no reference to non-durable Powers of Attorney.
The legislation makes no reference in the context of termination to incapacity of the principal.
In particular, §751.131 and §751.132 deal with termination of a Power of Attorney and termination as against an agent respectively, noting:-
Legislation makes no reference to non-durable Powers of Attorney, being legislation that in Texas, only relates to durable Powers of Attorney.
It might be said the description of durable is more a method and approach to creation than a description.
Similar to Illinois and Pennsylvania, in New York a Power of Attorney[30] is durable unless it expressly provides that it is terminated upon the principal losing capacity.
§5-1501A provides that "a Power of Attorney is durable unless it expressly provides that it is terminated by the principal losing capacity”.
§5-1501A provides that "a Power of Attorney is durable unless it expressly provides that it is terminated by the principal losing capacity”.
§1511 provides that “..a Power of Attorney terminates when the principal becomes incapacitated, if the Power of Attorney is not durable…”
Other than in §5-1504 dealing with third party enforcement regime, legislation contains no reference to non-durable Powers of Attorney.
That said, §1511 (cited below) refers to a Power of Attorney that is "not durable”.
§1511 provides that “..a Power of Attorney terminates when the principal becomes incapacitated, if the power of attorney is not durable…”
New York seems to be the closest to the approach taken in the 2006 ULC Recommendations, accepting that:
It might be submitted that the approach in New York is not ideal, because it fails to adequately account for conditional termination, as discussed in the Case Study - Conditional Termination.
For example, things become difficult where a Power of Attorney might say “..in the event that the principal lacks capacity and Bill Smith is appointed as an agent, this Power of Attorney will not terminate upon the principal losing capacity and if Bill Smith is not appointed as an agent, this Power of Attorney will terminate upon the principal losing capacity..".
In this situation, it might be said somehow that the Power of Attorney satisfies the expression “terminates when the principal becomes incapacitated” and yet, there are other outcomes and accordingly, such a Power of Attorney would be durable.
Similar to California and Texas, in Florida an expression of durable preference is required to be included in a durable Power of Attorney[31].
§709.2104 states:-
".. a power of attorney is durable if it contains the words: “This durable power of attorney is not terminated by subsequent incapacity of the principal except as provided in Chapter 709, Florida Statutes,” or similar words that show the principal's intent that the authority conferred is exercisable notwithstanding the principal's subsequent incapacity."
§709.2102 states:-
“Durable” means, with respect to a power of attorney, not terminated by the incapacity of the principal."
Legislation makes no reference to non-durable Powers of Attorney.
§709.2109 states that “..a Power of Attorney terminates when the principal becomes incapacitated, if the Power of Attorney is not durable”
Florida is the only state to adopt a default provision and also require inclusion of an expression of durable intent.
Similar to New York and Pennsylvania, in Illinois a Power of Attorney[32] is durable unless it expressly provides that it is terminated upon the principal losing capacity.
§2-5 states:-
“Unless the agency states an earlier termination date, the agency continues.. notwithstanding … the principal's disability or incapacity.”
Legislation makes virtually no reference to the term "durable".
Legislation makes no reference to non-durable Powers of Attorney.
Legislation does not include a prescription to the effect that a non-durable Power of Attorney terminates if the principal becomes incapacitated.
On a literal interpretation of §2-5:-
The answer to any conundrum this might otherwise have produced, for example where a principal wants to create a non-durable Power of Attorney in terms not involving a date, is found in §2-4 which states: “..the principal may specify in the agency the event or time when the agency will begin and terminate, the mode of revocation or amendment and the rights, powers, duties, limitations, immunities and other terms applicable to the agent and to all persons dealing with the agent, and the provisions of the agency will control notwithstanding this Act..”, the implications of which seem to be that an expression of the kind referred to in the second bullet paragraph above dealing with a Power of Attorney terminating upon the principal losing capacity would be given effect.
Similar to New York and Illinois, in Pennsylvania a Power of Attorney[33] is durable unless it expressly provides that it is terminated upon the principal losing capacity.
§5601.1 states: “..unless specifically provided otherwise in the Power of Attorney, all Powers of Attorney shall be durable as provided in §5604..”
§5604 states:-
(a) Definition.--A durable power of attorney is a power of attorney by which a principal designates another his agent in writing. The authority conferred shall be exercisable notwithstanding the principal's subsequent disability or incapacity. A principal may provide in the power of attorney that the power shall become effective at a specified future time or upon the occurrence of a specified contingency, including the disability or incapacity of the principal.
(b) Durable power of attorney not affected by disability or lapse of time. --All acts done by an agent pursuant to a durable power of attorney during any period of disability or incapacity of the principal have the same effect and inure to the benefit of and bind the principal and his successors in interest as if the principal were competent and not disabled. Unless the power of attorney states a time of termination, it is valid notwithstanding the lapse of time since its execution.
The mandatory notice in §5601 states:-
“Your agent may exercise the powers given here throughout your lifetime, even after you become incapacitated, unless you expressly limit the duration of these powers or you revoke these powers or a court acting on your behalf terminates your agent's authority.
§5604 states:-
(a) Definition.--A durable power of attorney is a power of attorney by which a principal designates another his agent in writing. The authority conferred shall be exercisable notwithstanding the principal's subsequent disability or incapacity. A principal may provide in the power of attorney that the power shall become effective at a specified future time or upon the occurrence of a specified contingency, including the disability or incapacity of the principal.
(b) Durable power of attorney not affected by disability or lapse of time. --All acts done by an agent pursuant to a durable power of attorney during any period of disability or incapacity of the principal have the same effect and inure to the benefit of and bind the principal and his successors in interest as if the principal were competent and not disabled. Unless the power of attorney states a time of termination, it is valid notwithstanding the lapse of time since its execution.
Legislation makes no reference to non-durable Powers of Attorney.
Legislation does not include a prescription to the effect that a non-durable Power of Attorney terminates if the principal becomes incapacitated.
It might be said the description of durable is more a method and approach to creation than a description.
The expression “become effective” or term "effect" and similar terminology features in important respects in the legislation of the Six (6) Greater States.
The term “springing Power of Attorney” is defined as a Power of Attorney that by its terms “becomes effective”at a specified future time or on the occurrence of a specified future event or contingency, including, but not limited to, the subsequent incapacity of the principal..(§4030)
The required expression of durable intent in §4124 which states “This Power of Attorney shall become effective upon the incapacity of the principal..”
The government form in §4128 states: “when effective, this durable Power of Attorney will give your agent the right to deal with property that you now have or might acquire in the future..”
§4129 states: “..a springing Power of Attorney containing the designation described in subdivision (a) becomes effective when the person or persons designated in the Power of Attorney execute a written declaration under penalty of perjury that the specified event or contingency has occurred, and any person may act in reliance on the written declaration without liability to the principal or to any other person, regardless of whether the specified event or contingency has actually occurred”
§4307 states: “a copy of a Power of Attorney certified under this section has the same force and effect as the original Power of Attorney”
§4402 dealing with an third party acting in good faith without knowledge of revocation of a Power of Attorney states: “is not effectiveas to a third party until the third party learns of the revocation in place of the sentence Revocation of the Power of Attorney is not effective as to a third party until the third party has actual knowledge of the revocation, in which case the form shall be interpreted as if it contained the sentence Revocation of the power of attorney is not effective as to a third party until the third party has actual knowledge of the revocation”
§4404 states: “a statutory form Power of Attorney legally sufficient under this part is durable to the extent that the power of attorney contains language, such as This Power of Attorney will continue to be effective even though I become incapacitated, showing the intent of the principal that the power granted may be exercised notwithstanding later incapacity..”
§4405 states:
The required expression of durable intent in §751.0021 states “..this Power of Attorney becomes effective on the disability or incapacity of the principal..”
§751.0021 confirms that a photocopy or electronically transmitted copy of an original durable Power of Attorney has the same “effect” as the original instrument and may be relied on, without liability, by a person who is asked to accept the durable Power of Attorney to the same extent as the original.
§751.203 in the context of agent's certifications states: "if under its terms the Power of Attorney becomes effective on the disability or incapacity of the principal, the person to whom the Power of Attorney is presented may request that the certification include a written statement from a physician attending the principal that states that the principal is presently disabled or incapacitated.."
§751.209 dealing with good faith third party reliance includes the words: “the Power of Attorney were genuine, valid, and still in effect”.
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 (§5-1501B).
If the Power of Attorney states that it “takes effect” upon the occurrence of a date or a contingency specified in the document, then the Power of Attorney “takes effect” only when the date or contingency identified in the document has occurred, and the signature of the agent acting on behalf of the principal has been acknowledged (§5-1501B).
In the context of good faith reliance §5-1504 provides: “may rely upon the Power of Attorney as if the Power of Attorney were genuine, valid and still in effect, the agent's authority were genuine, valid and still in effect".
In the context of affirmations provided by an agent to a third party, “..execute an acknowledged affidavit.. stating that the Power of Attorney is in full force and effect..” §5-1504.
A Power of Attorney for a person[34] that “becomes effective” at a future point in time or upon the occurrence of a contingency is prohibited (§709.2108(3)).
In Illinois, the government form in §3-3 contains the notations:
§5602 confirms that a photocopy or electronically transmitted copy of an originally executed Power of Attorney has the same “effect” as the original.
§5604 affirms the entitlement of a principal to create a Power of Attorney that shall “become effective” at a specified future time or upon the occurrence of a specified contingency, including the disability or incapacity of the principal".
In dealing involving good faith reliance by a third party, §5604 affirms a third party may rely upon the Power of Attorney as if the Power of Attorney and agent's authority were genuine, valid and still in “effect”.
§5613 recognizes that the meaning and “effect” of a Power of Attorney is determined by the law of the jurisdiction indicated in the Power of Attorney.
The analysis on this page is of no relevance to a Power of Attorney for a commercial entity:-
Powers of Attorney for a person that are excluded from the ambit of the legislation are excluded from the ambit of the information on this page.
Where a Power of Attorney for a person that is excluded from the ambit of the legislation:-
See for example, the article by Moses & Singer LLP dated March 8, 2021 and titled Big Changes to New York’s Power of Attorney Law Are Coming June 13, 2021 under the heading “Unanswered Questions” towards the end of the article, identifying questions arising from the recent changes to the laws relating to Powers of Attorney in New York, which became effective on June 13, 2021. ↩︎
Being a Power of Attorney for a person that is not excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
See the discussion at page 893 of The Rationale of Agency by Warren Seavey (1920) ↩︎
See The Durable Power of Attorney's Place In The Family of Fiduciary Relationships by Karen E Boxx (2001) at page 6. ↩︎
See for example, Fordham and Leach at page 452. ↩︎
See the Table Summary - Legislative Grounds for Termination ↩︎
As compared to say, Texas, New York and Florida where §751.131, §5-1511 and §709.2109 respectively speak of termination of a Power of Attorney where no agent is appointed, accepting that §751.131 in Texas only operates in respect of a durable Power of Attorney (which cannot be a Power of Attorney excluded from the ambit of the legislation) and §5-1511 and §709.2109 in New York and Florida respectively only apply to Powers of Attorney not excluded from the ambit of the legislation). ↩︎
Being not a Power of Attorney that is excluded from the ambit of the legislation - click here to read more. ↩︎
Being not Powers of Attorney that are excluded from the ambit of the legislation - click here to read more. ↩︎
Being not a Power of Attorney that is excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Being a Power of Attorney for a person that is not excluded from the ambit of the legislation - click here to read more. ↩︎
Being a Power of Attorney that is not excluded from the ambit of the legislation - click here to read more. ↩︎
Being a Power of Attorney that is not excluded from the ambit of the legislation - click here to read more. ↩︎
Being a Power of Attorney for a person that is not excluded from the ambit of the legislation - click here to read more. ↩︎
Being a Power of Attorney for a person not for a purpose excluded from the ambit of the legislation - click here to read more. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being not a Power of Attorney excluded from the ambit of the legislation. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being Powers of Attorney for a person that are not excluded from the ambit of the legislation. ↩︎
Being not a Power of Attorney for a person that is excluded from the ambit of the legislation. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Ibid. ↩︎
Being not a Power of Attorney that is excluded from the ambit of the legislation ↩︎