# Importance of Powers of Attorney

> Why are Powers of Attorney important?

Source: https://wiki.powersofattorney.com/importance · Updated 28 January 2023

This page examines the [problems solved](https://wiki.powersofattorney.com/importance#what-problems-are-solved-by-powers-of-attorney) by *Powers of Attorney*, how *Powers of Attorney* [achieve their purpose](https://wiki.powersofattorney.com/importance#how-do-powers-of-attorney-achieve-their-purpose) and [why durable *Powers of Attorney* are important](https://wiki.powersofattorney.com/importance#durable-powers-of-attorney-are-an-important-development).

The contents of this page are focused upon *Powers of Attorney* for [commercial](https://wiki.powersofattorney.com/terms#meaning-of-commercial) purposes.

### Why Use *Powers Of Attorney*?

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](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) experiencing periods of full or partial [incapacity](https://wiki.powersofattorney.com/capacitytexas#the-six-6-greater-states-have-defined-incapacity-in-legislation), particularly towards the end of their lives.

We are making more use of [bodies corporate](https://wiki.powersofattorney.com/terms#meaning-of-body-corporate-or-bodies-corporate) like corporations, partnerships, associations & trusts.

On one or more occasions, or perhaps for a period of time, a [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) or [body corporate](https://wiki.powersofattorney.com/terms#meaning-of-body-corporate-or-bodies-corporate) may be unwilling or unable to perform [tasks](https://wiki.powersofattorney.com/whatcanagentdo#there-are-lots-of-examples-of-commercial-tasks) that are capable of being performed by another [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) or [body corporate](https://wiki.powersofattorney.com/terms#meaning-of-body-corporate-or-bodies-corporate) on their behalf.

Alternatively, a [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) or [body corporate](https://wiki.powersofattorney.com/terms#meaning-of-body-corporate-or-bodies-corporate) may simply prefer that certain [tasks](https://wiki.powersofattorney.com/whatcanagentdo#there-are-lots-of-examples-of-commercial-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.

### How Do ***Powers Of Attorney*** Achieve Their Purpose?

A [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) or a [body corporate](https://wiki.powersofattorney.com/terms#meaning-of-body-corporate-or-bodies-corporate) can use a *Power of Attorney* to arrange for [tasks](https://wiki.powersofattorney.com/whatcanagentdo#there-are-lots-of-examples-of-commercial-tasks) to be done by an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) on their behalf.

A *Power of Attorney* serves as a written record evidencing the appointment of an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal), which can be presented by an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) to a [third party](https://wiki.powersofattorney.com/terms#meaning-of-third-party) to prove they are authorized to act on behalf of the [principal](https://wiki.powersofattorney.com/principal#the-principal-is-the-entity-that-makes-the-power-of-attorney).

A [third party](https://wiki.powersofattorney.com/terms#meaning-of-third-party) can conveniently refer to the *Power of Attorney* for example, to determine the extent of the [agent's](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) authority.[^1]

By appointing an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) or [agents](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) using a *Power of Attorney*, the [principal](https://wiki.powersofattorney.com/principal#the-principal-is-the-entity-that-makes-the-power-of-attorney) can be assured that their [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) or [agents](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) will always put their interests before the [agent's](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) own interests, because an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) has an obligation to put the [principal's](https://wiki.powersofattorney.com/principal#the-principal-is-the-entity-that-makes-the-power-of-attorney) interests first at all times, being the substance of an [agent's](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) [fiduciary](https://wiki.powersofattorney.com/terms#meaning-of-fiduciary) duty.[^2]

### **Durable** ***Powers Of Attorney*** **Are An Important Development**

Prior to 1954, the [common law](https://wiki.powersofattorney.com/terms#meaning-of-common-law) prevented an [agent](https://wiki.powersofattorney.com/agentswhatisagent#an-agent-is-an-entity-appointed-by-the-principal-to-represent-and-bind-the-principal) from acting under a *Power of Attorney* unless the [principal](https://wiki.powersofattorney.com/principal#the-principal-is-the-entity-that-makes-the-power-of-attorney) had [capacity](https://wiki.powersofattorney.com/capacitytexas#capacity-refers-to-ability-to-manage-ones-own-affairs).

The first legislative initiative to alter the [common law](https://wiki.powersofattorney.com/terms#meaning-of-common-law) to permit the [creation](https://wiki.powersofattorney.com/creation/create#terms-like-create-or-make-a-power-of-attorney-have-various-meanings) of [durable](https://wiki.powersofattorney.com/typescommonlyusedpersons#durable-powers-of-attorney) *Powers of Attorney* was undertaken in Virginia in 1954.[^20]

The first federal initiative to encourage states to embrace [durable](https://wiki.powersofattorney.com/typescommonlyusedpersons#durable-powers-of-attorney) *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](https://wiki.powersofattorney.com/typescommonlyusedpersons#durable-powers-of-attorney) *Powers of Attorney* was first introduced in 1971[^4],1974[^5], 1975[^6], 1979[^7], 1982[^8] and 1987[^9] respectively.

[Durable](https://wiki.powersofattorney.com/typescommonlyusedpersons#durable-powers-of-attorney) *Powers of Attorney*:-

- were a significant development, because they allow a [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) to delegate [tasks](https://wiki.powersofattorney.com/whatcanagentdo#there-are-lots-of-examples-of-commercial-tasks) to a [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person), or other kind of [legal entity](https://wiki.powersofattorney.com/terms#meaning-of-legal-entity), on terms that will continue to remain effective, if that [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) loses [capacity](https://wiki.powersofattorney.com/capacitytexas#capacity-refers-to-ability-to-manage-ones-own-affairs).
- improve the likelihood that a [person's](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) preferences are honored, if that [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) loses [capacity](https://wiki.powersofattorney.com/capacitytexas#capacity-refers-to-ability-to-manage-ones-own-affairs)
- might be insisted upon by anyone doing business with a [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) who is concerned about outcomes associated with that [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) losing [capacity](https://wiki.powersofattorney.com/capacitytexas#capacity-refers-to-ability-to-manage-ones-own-affairs).

The use of a [durable](https://wiki.powersofattorney.com/typescommonlyusedpersons#durable-powers-of-attorney) *Powers of Attorney* reduces the risk of a [person's](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) affairs being supervised by a Court, if that [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) loses [capacity](https://wiki.powersofattorney.com/capacitytexas#capacity-refers-to-ability-to-manage-ones-own-affairs) to manage their own affairs.

Using a [durable](https://wiki.powersofattorney.com/typescommonlyusedpersons#durable-powers-of-attorney) *Power of Attorney* that is [fit for purpose](https://wiki.powersofattorney.com/whatisapoa#must-be-fit-for-purpose) is the best means by which a [person](https://wiki.powersofattorney.com/terms#meaning-of-person-ie-natural-person) can ensure that resources are not spent on lawyers and Courts, if they lose [capacity](https://wiki.powersofattorney.com/capacitytexas#capacity-refers-to-ability-to-manage-ones-own-affairs).

**Next Page**

**Overview**

- **The [next page](https://wiki.powersofattorney.com/nature) **examines the nature of a *Power of Attorney***, how they differ from agency agreements, how an agent differs from a trustee and resolving differences between the law and express terms.**

**Headings**

The headings on the next page are:

- [**Nature** of a *Power of Attorney*](https://wiki.powersofattorney.com/nature#nature-of-a-power-of-attorney)
- [**Law** versus **express terms**](https://wiki.powersofattorney.com/nature#law-versus-express-terms)
- [How does a *Power of Attorney* **differ from** an **agency agreement**?](https://wiki.powersofattorney.com/nature#how-does-a-power-of-attorney-differ-from-an-agency-agreement)
- [How does an **agent** under a *Power of Attorney* **differ from** a **trustee**?](https://wiki.powersofattorney.com/nature#how-does-an-agent-under-a-power-of-attorney-differ-from-a-trustee)

[^1]: See the [four corners rule](https://wiki.powersofattorney.com/terms#meaning-of-four-corners-rule).
[^2]: Although reference to the existence of a [fiduciary](https://wiki.powersofattorney.com/terms#meaning-of-fiduciary) duty has been [deleted from the legislation](https://wiki.powersofattorney.com/terms#pennsylvania-1) in Pennsylvania.
[^3]: See [*Empowering The Wicked: How Some Agents Use A Power Of Attorney To Commit The Crime Of Financial Exploitation*](https://theelderlawjournal.com/wp-content/uploads/2022/10/Morgan.pdf), Kevin Hansen, Rebecca Morgan, Pamela Teaster, Randolph Thomas (2022) at page 5 for a useful discussion of relevant history.
[^4]: See [*The Story of the Texas Estates Code*](https://ttu-ir.tdl.org/bitstream/handle/2346/73630/15_6EstPlan%26CmtyPropLJ323%282013-2014%29.pdf?sequence=1&isAllowed=y), William D Pargaman, Estate Planning & Community Property Law Journal, Vol 6 (2014) at page 330.
[^5]: See [*Florida Durable Power of Attorney Law: The Need for Reform*](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwjtsJfBsa_8AhW9tGMGHUL4BDQQFnoECA8QAQ&url=https%3A%2F%2Fir.law.fsu.edu%2Fcgi%2Fviewcontent.cgi%3Farticle%3D2365%26context%3Dlr&usg=AOvVaw1BeeiykZShwRBeH7rIj0iw) by Robert Craig Waters, Florida State University Review, Vol 17, Issue 3, Spring 1990 at page 531.
[^6]: See the [*2007 Recommendation On Proposed Revisions To The General Obligation Law Power of Attorney*](https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&ved=2ahUKEwj9pM6osK_8AhXu6jgGHewxDPgQFnoECAoQAQ&url=https%3A%2F%2Fnyslawrevision.files.wordpress.com%2F2014%2F07%2F07-rec-gol.pdf&usg=AOvVaw1rZyUEuorvEBZEujV3Tbu8) New York State Law Reform Commission at page 10.
[^7]: See [*Comprehensive Power of Attorney Law*](http://www.clrc.ca.gov/pub/Printed-Reports/Pub181.pdf), 24 Cal L. Revision Comm'n Reports 111 (1994) at page 117.
[^8]: [Chapter 56, Title 20](https://www.legis.state.pa.us/cfdocs/legis/LI/consCheck.cfm?txtType=HTM&ttl=20&div=0&chpt=56&sctn=1&subsctn=0) of the *Pennsylvania Consolidated Statutes* first introduced [durable](https://wiki.powersofattorney.com/typescommonlyusedpersons#durable-powers-of-attorney) *Powers of Attorney* in 1982.
[^9]: Effective September 22, 1987, Illinois enacted the [*Illinois Power of Attorney Act*](https://www.ilga.gov/legislation/ilcs/ilcs5.asp?ActID=2113&ChapterID=60) including Article II dealing with [durable](https://wiki.powersofattorney.com/typescommonlyusedpersons#durable-powers-of-attorney) *Powers of Attorney*