01 Dec 10 FREQUENTLY ASKED QUESTIONS ABOUT POWERS OF ATTORNEY IN TEXAS
If you trust someone, you should have a power to attorney to give an agent the authority stated in the document. However, there a various types of powers of attorney. The following are 10 of the most frequently asked questions about powers of attorney in Texas.
- What is a general power of attorney?
This is probably the most common power of attorney in dealing with financial matters. The one who gives the authority (the “principal”) names someone (the “agent”) who can act on the principal’s behalf. A general power of attorney is broad (i.e. ranging from handling financial accounts to real estate transactions) in scope – although it doesn’t mean the agent can do everything for the principal. Either the principal or agent can act on behalf of the principal as long as there is competency or capacity. Some financial institutions prefer the customers use the form of the institution.
- What is a limited power of attorney?
A limited power of attorney is when the principal gives the agent limited powers. For example, a limited power of attorney might say the agent can only serve to sell a particular piece of real estate.
- What is a durable power of attorney?
A durable power of attorney means the power of attorney is effective and the agent can act for the principal even if the principal is disabled. Most powers of attorney (whether general, limited, etc.) are durable so that the agent can act for the principal and avoid guardianship over the assets.
- What is a springing power of attorney?
A springing power of attorney means the agent doesn’t have authority to act on behalf of the principal until there has been a determination of incapacity. Although many might think this is better than the agent having the authority to immediately act, it is generally better to give the agent immediate authority since it is often difficult to determine when a principal no longer has sufficient mental capacity. It may take time to schedule an appointment with a doctor to determine mental incapacity when an immediate action is needed. The principal can revoke a power of attorney (as long as the principal has mental capacity).
- What is a medical power of attorney?
This is power of attorney whereby the principal gives the agent the power to make medical decisions for the principal. Authority only springs upon the principal’s incapacity – and not before that time. An agent named under a general or limited power of attorney doesn’t have the authority to make medical decisions by a separate document (unless the agent is also named as the agent under the medical power of attorney).
- What are the requirements for a power of attorney to be valid?
The principal must be the age of majority, have sufficient mental capacity and the document must be signed before a notary public.
- When is a power of attorney no longer effective?
As long as the principal has mental capacity, the principal can revoke the power of attorney. The types of powers of attorney mentioned above also terminate on the death of the principal. If the agent is the principal’s spouse, then the power of attorney terminates upon divorce.
- Is there any type of power of attorney that is irrevocable and that doesn’t terminate on death?
Yes. The Texas Business Code permits the creation of an irrevocable power of attorney that does not terminate upon death. It only applies to actions of an agent in connection with a limited liability company in which the principal owns an interest.
- How do you revoke a power of attorney?
A revocation should be signed before a notary public. If the power of attorney was recorded with the county clerk’s office (generally recommended if you own real estate), then the revocation should also be recorded. Notice of revocation should also be given to the agent.
- What happens if you do not have a power of attorney and you no longer have capacity (assuming assets are not held in a trust)?
In Texas, there is guardianship of the person and guardianship of the estate. This is a costly and cumbersome process which results in greater legal fees on behalf of the person lacking mental capacity. Furthermore, court approval may be required for certain actions causing delay.
As long as you trust someone over the age of majority and you have mental capacity, you should have a power of attorney to handle your financial affairs (to the extent desired) in addition to a medical power of attorney.
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