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The Power of Protection.
This page examines the problems solved by Powers of Attorney, how Powers of Attorney achieve their purpose and why durable Powers of Attorney are important.
The contents of this page are focused upon Powers of Attorney for commercial purposes.
As time progresses, we are living busier lives and require more knowledge and expertise to manage our affairs.
We are spending more time away from our homes.
Medical developments are increasing the likelihood of people experiencing periods of full or partial incapacity, particularly towards the end of their lives.
We are making more use of bodies corporate like corporations, partnerships, associations & trusts.
On one or more occasions, or perhaps for a period of time, a person or body corporate may be unwilling or unable to perform tasks that are capable of being performed by another person or body corporate on their behalf.
Alternatively, a person or body corporate may simply prefer that certain tasks are performed on their behalf, because it is convenient.
All of these factors mean the use of Powers of Attorney is likely to continue to increase.
A person or a body corporate can use a Power of Attorney to arrange for tasks to be done by an agent on their behalf.
A Power of Attorney serves as a written record evidencing the appointment of an agent, which can be presented by an agent to a third party to prove they are authorized to act on behalf of the principal.
A third party can conveniently refer to the Power of Attorney for example, to determine the extent of the agent's authority.[1]
By appointing an agent or agents using a Power of Attorney, the principal can be assured that their agent or agents will always put their interests before the agent's own interests, because an agent has an obligation to put the principal's interests first at all times, being the substance of an agent's fiduciary duty.[2]
Prior to 1954, the common law prevented an agent from acting under a Power of Attorney unless the principal had capacity.
The first legislative initiative to alter the common law to permit the creation of durable Powers of Attorney was undertaken in Virginia in 1954.[^20]
The first federal initiative to encourage states to embrace durable Powers of Attorney was the 1979 Uniform Durable Power of Attorney Act delivered by National Conference of Commissioners on Uniform State Laws.[3]
In Texas, Florida, New York, California, Pennsylvania and Illinois, legislation recognizing durable Powers of Attorney was first introduced in 1971[4],1974[5], 1975[6], 1979[7], 1982[8] and 1987[9] respectively.
Durable Powers of Attorney:-
were a significant development, because they allow a person to delegate tasks to a person, or other kind of legal entity, on terms that will continue to remain effective, if that person loses capacity.
improve the likelihood that a person's preferences are honored, if that person loses capacity
might be insisted upon by anyone doing business with a person who is concerned about outcomes associated with that person losing capacity.
The use of a durable Powers of Attorney reduces the risk of a person's affairs being supervised by a Court, if that person loses capacity to manage their own affairs.
Using a durable Power of Attorney that is fit for purpose is the best means by which a person can ensure that resources are not spent on lawyers and Courts, if they lose capacity.
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See the four corners rule. ↩︎
Although reference to the existence of a fiduciary duty has been deleted from the legislation in Pennsylvania. ↩︎
See Empowering The Wicked: How Some Agents Use A Power Of Attorney To Commit The Crime Of Financial Exploitation, Kevin Hansen, Rebecca Morgan, Pamela Teaster, Randolph Thomas (2022) at page 5 for a useful discussion of relevant history. ↩︎
See The Story of the Texas Estates Code, William D Pargaman, Estate Planning & Community Property Law Journal, Vol 6 (2014) at page 330. ↩︎
See Florida Durable Power of Attorney Law: The Need for Reform by Robert Craig Waters, Florida State University Review, Vol 17, Issue 3, Spring 1990 at page 531. ↩︎
See the 2007 Recommendation On Proposed Revisions To The General Obligation Law Power of Attorney New York State Law Reform Commission at page 10. ↩︎
See Comprehensive Power of Attorney Law, 24 Cal L. Revision Comm'n Reports 111 (1994) at page 117. ↩︎
Chapter 56, Title 20 of the Pennsylvania Consolidated Statutes first introduced durable Powers of Attorney in 1982. ↩︎
Effective September 22, 1987, Illinois enacted the Illinois Power of Attorney Act including Article II dealing with durable Powers of Attorney ↩︎