A power of attorney (POA) is a writing giving someone else the power to act as agent for the grantor.  The person granting the powers is called the “principal.”  The agent is called the attorney-in-fact.  

Broad or Narrow

A POA can be expansive or limited.  A broad grant of power allows the attorney-in-fact to act for the principal with respect to  

  • Real property
  • Tangible personal property
  • Stocks and bonds
  • Commodity trading
  • Banking
  • Business operations
  • Insurance
  • Claims and litigation and more.

    An attorney-in-fact can do almost anything the principal himself could do.   One exception is wills.  Under California law, an attorney-in-fact is prohibited from creating a will for the principal.

    A power can be limited to a specific transaction or time period.  For example, I prepared a limited power of attorney for clients who planned to be abroad during the period that escrow was expected to close on the purchase of an income property.  The couple appointed their oldest son as their agent to consummate and sign all papers during their absence.  The POA expired on the date they expected to return.  The transaction was successfully completed.

    Money or Health

    A POA can deal with financial matters or medical decisions.  The former is known as a durable financial power of attorney.  The latter is a power of attorney for health care and is usually part of an individual’s advance health care directive.

    Now or Later

    A POA can be effective immediately or upon the happening of a trigger.  A “springing” POA, commonly used in estate planning, “springs” into effect on the principal’s incapacity.

    Requirements

    The POA must be signed and dated.   It must be either notarized or witnessed.  The principal must have the mental capacity to understand what he or she is signing.

    How a POA Can Be Used by Property Owners

    A statutory form POA empowers the agent to do all of the following with respect to real property transactions:

  • Do any act of management with respect to an interest in real property.  For example, the agent can insure against casualty, liability, or loss.  He can obtain or regain possession or protect the interest by litigation.  The agent can compromise or contest taxes or assessments.  The agent can purchase supplies, hire assistance or labor, and make repairs or alterations in the real property.
  • Use, develop, alter, erect, or remove structures or other improvements.
  • Sell, exchange, convey, quitclaim, encumber, partition, subdivide, apply for rezoning, plat or consent to platting, grant options, lease, sublease or otherwise dispose of an interest in real property.

    Conclusion

    A POA is a powerful and flexible document.  Used properly, it can save the client and her family headaches in dealing with financial matters.  In certain circumstances, a general POA can even prevent the need to petition the court to establish a conservatorship of the estate.

    Edgar Saenz is a Los Angeles estate planning attorney.  A graduate of Stanford Law School, he is a member of the Trust and Estates sections of the State Bar of California and the Los Angeles County and Santa Monica bar associations.  He is rated AV (Preeminent, Highest Possible Rating) by Martindale Hubbell. Telephone:  (310) 417-9900; Edgar@EdgarSaenz.com.