What is a Power of Attorney and how is it created?
A power of attorney authorizes a person to act on behalf of another person. It is a ‘durable’ power of attorney if the grant of authority survives the disability or incapacity of the principal who granted the power. The following are some requirements for an effective Power of Attorney (POA) are:
- It must be a written instrument,
- It must designate the person who will act as the Attorney in Fact or agent,
- It must be signed by an adult principal,
- It must be acknowledged by a Notary under the laws of Washington or any other state.
How long does a POA last?
Unless a specific time limit is imposed in the written instrument, a POA does not expire during the lifetime of the Principal.
What authority will the Attorney in Fact have to act on behalf of the Principal?
All acts done by an Attorney in Fact or agent pursuant to a POA during any period of disability or incapacity of the principal have the same effect and inure to the benefit of and bind the principal and the principal’s successors in interest as if the principal were not disabled or incapacitated.
What acts may an Attorney in Fact perform on behalf of the Principal pursuant to the POA?
In general, an Attorney in Fact acting under a POA may do any lawful act that the Principal may do. The Durable Power of Attorney Act state many specific acts which may be performed on behalf of the Principal including the right to invest money, demand payments, commerce or defend litigation, execute documents including deeds, contracts and mortgages. An Attorney in Fact may only make gifts from the Principal’s property if the POA specifically grants such power.
When do the powers granted under a POA terminate?
- The POA terminates upon the death of the Principal.
- A principal may, in writing, revoke the POA at any time. The POA may require that a revocation is only effective by an instrument recorded with the County Clerk’s Office.
- If a person executed a POA granting authority to a spouse, the POA automatically terminated upon a divorce of the parties.
- If a POA has been revoked, the revocation is not effective as to a third party replying upon the power until that third party receives actual notice of the revocation of the POA.
- The bankruptcy of a principal does not terminate the power of the Attorney in Fact under a POA.
Must a POA be recorded with the County Clerk?
No, except in real estate transaction. In a real estate transaction, the POA will usually be recorded in the office of the County Clerk to evidence the authority of the person executing the deed, deed of trust, assignment, release or other instruments which must itself be recorded.
What duty does an Attorney in Fact owe to the principal?
An Attorney in Fact, acting under a POA, is a fiduciary to the principal and has a duty to inform the principal and to account for actions taken pursuant to the POA. This includes a duty to account for all property coming into the hands of the Attorney in Fact and all disbursements made on behalf of the principal. An Attorney in Fact has a duty to maintain records and to keep segregated funds belonging to the principal.
What are the common problems with using a POA?
If the POA is not properly prepared, executed and acknowledged, it will not confer any lawful authority to act on behalf of the Principal.
Since the POA terminates upon death, a title company may wish to be provided evidence the Principal is still alive at the time of the closing and execution of the deed or mortgage.