UNDERSTANDING A POWER OF ATTORNEY
A power of attorney (POA) gives another person (the “attorney in fact” or “agent”) the right to act on behalf of, or instead of, the person who signed the power of attorney (the “principal”). It is effective when signed, gives the agent authority to do anything permitted by the POA, and requires no additional approval by the principal. A Power of Attorney is powerful and useful precisely because it gives the agent such broad authority.
Many people, including GLBT people, do not wish to give the broad authority permitted by a power of attorney unless their abilities or capacity are diminished in some way. This is understandable, and such people may wish to consider creating a Living Trust instead of a Power of Attorney. Like a POA, a Living Trust can grant broad authority. Unlike a POA, a Living Trust applies only to the assets placed in the trust. In addition, a Living Trust could appoint two co-Trustees, require both Trustees to sign for any actions, and permit one Trustee to continue acting if the other becomes incapacitated or dies. A POA terminates upon the death of the principal, but a Trust can continue and can even be used to distribute assets outside a probate estate (i.e., “avoid probate.”).