Among the most frequent questions an estate planning attorney receives is, “Can I get power of attorney for a family member?” Most people have a general concept of power of attorney but relatively few understand its implications including when and how it is granted. This article will go over the two main types of power of attorney, what they cover, how someone can grant power of attorney, and the role capacity plays during execution of the power of attorney.
What is Power of Attorney and What Authority Grants It?
Nevada law defines power of attorney as “a writing or other record that grants authority to an agent acting in the place of the principal” (NRS 162A.090). The principal is the “individual who grants authority to an agent in a power of attorney” (NRS 162A.110).
Simplified, power of attorney is used to give an agent (someone not-you) the power to act for the principal (you). In the eyes of the law, to the extent that the power of attorney is assigned, another person is you.
Nevada deals mainly with two types of power of attorney: Power of Attorney for Financial Matters and the Durable Power of Attorney for Health Care Decisions. Each power of attorney is important in its own sphere and ideally you want to execute both to protect the principal in the situations each covers.
Financial power of attorney allows you (or another principal) to appoint an agent who has authority over any of several assets. Assets include thing such as real property, personal property, and bank accounts. The agent is also responsible for seeing to the personal maintenance of the principal. You can also elect whether to make the power of attorney effective immediately or upon determination by a doctor that the principal no longer has capacity.
Health care power of attorney allows the principal to appoint an agent they authorize to make health care decisions on their behalf if they are otherwise unable to make those decisions. This power of attorney also allows the principal to declare their desires in regard to whether life prolonging treatments should be started or continued.
Execution of Power of Attorney
Nevada law requires certain procedures be followed to validly execute a power of attorney. The financial power of attorney and power of attorney for health care decisions each have their own sets of requirements. Once the requirements are met, the actual power of attorney is deemed completed or executed.
The financial power of attorney must be signed by the principal, or in the principal’s conscious presence by a person directed by the principal to sign the principal’s name. You don’t have to sign the document but you need to be awake and present when someone you appoint to sign the document does the signing. The signature is seen as valid by the court if notarized (NRS 162A.220[1]).
The health care power of attorney must be signed by the principal and the signature must either be notarized or witnessed by two adults who know the principal personally (NRS 162A.790[2]). The witnesses also cannot be a health care provider or the appointed agent. At least one witness must be a person who is not related to the principal and has no interest in the principal’s estate (NRS 162A.790[3]-[4]). You can’t have your agent, a doctor, or a family member be the only witnesses as each can have a conflict of interest. This is why there needs to be two witnesses, to provide an objective level of accountability for the signing.
The Importance of Capacity
Besides proper execution, the statutes governing power of attorney also provide extra requirements for validity in certain situations to ensure that the principal is competent to execute the power of attorney.
A critical failsafe of establishing a power of attorney is that this is not an authority or position that a potential agent can actively seek out and obtain on their own. Nobody can go and “get” power of attorney. Rather, this authority is granted to the agent by the principal of their own volition. In this light, a person lacking capacity cannot make this appointment. Generally speaking, a person of diminished capacity cannot enter into contracts, but the regulations are more stringent in terms of power of authority.
The law is so concerned with a principal’s competency that it requires proof of competency in certain cases. The statutes for both the financial power of attorney and the health care power of attorney provide that, “if the principal resides in a hospital, residential facility for groups, facility for skilled nursing or home for individual residential care,” when the power of attorney is executed, the power of attorney must be accompanied by a certificate of competency from a physician, psychologist, or psychiatrist declaring that the principal has the requisite capacity to execute the power of attorney (NRS 162A.220[2]; NRS 162A.790[5]).
The Importance of Power of Attorney
Drafting a valid power of attorney is a common part of an estate planning attorney’s role in building a person’s estate plan. Unlike other parts of an estate plan which contemplate what happens after a person dies, powers of attorney take into account a person’s needs during their lifetime. In many cases, a power of attorney can supersede the need for a court-appointed guardianship. The cost of having the power of attorney correctly executed is well worth any person’s time and can certainly simplify matters when caring for a loved one in need of assistance.