Granting a Power of Attorney in Ohio(POA): An Overview
One of the challenges of aging and human frailty is that there are times when we cannot transact business because of incompetence. Incompetence can develop slowly due to illness or aging, or it can occur instantly due to a stroke, medical condition or accident.
When an individual is incompetent, they cannot take action to protect themselves, or their family. A family’s care for the individual may be sufficient generally, but if something needs to be done such as sale of real property owned by the incompetent person, then someone other than the incompetent person will have to act to accomplish this goal.
The Probate Court of the County of residence in Ohio can authorize someone to do this. However, it costs money and takes time to set up a guardian in probate to act for the incompetent. While that is being done, time and money are being spent. Ultimately the goals that can be achieved through the guardianship may be lost due to the passage of time, or lack of funds.
One way to solve these problems in advance of incompetence is to grant a Power of Attorney to trustworthy people to act on behalf of the grantor of the power to transact business if they should become incompetent. A Power of Attorney is a legal document in which one person (sometimes referred to as the “principal”) authorizes another person to act for the principal as their agent, even where the principal is incompetent.
If a grant of Power of Attorney is not restricted then it will be valid for the principal regardless of whether the principal is incompetent or is competent. If the principal wishes to restrict the Power of Attorney to be effective only when he or she is incompetent, then it is called a ‘Springing’ Power of Attorney that springs into effect only if the principal is incompetent.
Usually there are provisions written that specify how incompetency is supposed to be documented, so that everyone knows when they can and should act for the principal. However, if there are no restrictions when the Power of Attorney is granted, the agent can act for the principal whether they are competent and available or not.
A Power of Attorney can allow the agent to conduct business, make decisions on their behalf, and handle specific actions as the agent may see fit on behalf of the principal, and in the principal’s best interests.
At one time, not so long ago, Powers of Attorney did not operate if the individual granting the power was incompetent. This surprises many people because often that is exactly when such a document would seem most appropriate. However, today traditional Powers of Attorney operate when the individual is incompetent. This type of legal function or agency under the Power of Attorney is called a durable provision because it endures incompetency of the principal, and remains effective.
Again, at one time in Ohio Powers of Attorney after these documents were permitted to be durable, they were durable only if they stated that they were durable in effect. Today, these documents are presumed to be durable when granted, but the language of the Power of Attorney often still includes language stating that they are durable in effect, through incompetency of the principal, unless stated otherwise in the grant of the Power of Attorney.
Extent of Permission
In Ohio, and in other jurisdictions, a Power of Attorney can be for a limited or a specific period of time.
It can also be specific in purpose or general in purpose. The general Power of Attorney allows a third party to transact business on behalf of the principal. However, the grantor may impose limitations in the language to restrict the agent’s powers. For instance, someone can stipulate that the agent can sign on real estate closings, but only when the principal is unavailable.
Revoking a Power of Attorney
The principal retains the right to revoke his or her Power of Attorney at any time. Sometimes revocation is difficult because it is difficult to locate all the persons that may have the Power of Attorney so that they can be notified of the revocation.
Requiring Acceptance of a Power of Attorney
Ohio law does not require a third party to honor a Power of Attorney. However, generally business may be conducted under the Power Attorney because if it is clear in granting powers many people find it acceptable to honor the power. Certainly it is legally permissible to do so.
Most problems on these lines that we have seen have occurred due to financial institutions refusal to honor the Power without Court involvement or simply refusal to honor it due to circumstances or language in the agreement.
It is not uncommon for a bank to refuse to honor a Power of Attorney unless the banking power is stated explicitly.
If you should have questions about this subject or feel you are a candidate and need a Power of Attorney assigned for your situation, please contact Bale & Associates today and we will be happy to assist you with your personal matter!