A power of attorney can be an invaluable part of estate planning and incapacity planning in Rio Rancho. These documents grant authority to an agent to act on your behalf and conduct financial and business transactions. Certain types of power of attorney give your agent the ability to make key decisions about your medical care. Refer to an experienced Rio Rancho law firm for more information on how these arrangements could work to your benefit in cases where you are indisposed or incapacitated.
The idea of a power of attorney may sound unusual to some people. But the reality is that we can’t always be conscious and available for some of the most important transactions or decisions in our lives. One of the biggest concerns is that we could become incapacitated at any moment, whether it occurs because of an accident, a medical condition, or some other disastrous event. When these times come, having a power of attorney can make a huge difference in your ability to take care of yourself and your family.
Creating powers of attorney will involve some hugely consequential choices. You can customize your documents to fit your exact needs, including the situations you want to prepare for — as well as those you seek to avoid. Get personalized guidance on drafting powers of attorney from an experienced lawyer in Rio Rancho when you call our offices at (505) 503-1637 or contact us online to schedule a no-obligation case review.
A power of attorney is a special type of document authorizing someone else to handle certain decisions, transactions, and affairs on your behalf. You can think of it as a legally recognized permission slip.
When creating a power of attorney, you (known as the principal) name a person who can act in your place (known as the agent or attorney-in-fact) in certain situations. In your power of attorney, you can get as specific or general as you want with the types of actions you authorize your agent to perform.
Your agent has a legal obligation (known as a fiduciary duty) to act responsibly and follow your instructions. Even still, you should only grant power of attorney to someone you deeply trust, as they can inflict a fair amount of damage if they are incompetent, unreliable, or looking to enrich themself at your expense.
A durable power of attorney allows an agent to continue acting on the principal’s behalf even when the principal is incapacitated. Incapacity can include situations where the principal is medically sedated, unconscious for a prolonged period of time, or in a mental state where they are unable to fully understand things and act for themselves.
In most scenarios where a principal is incapacitated, it is unclear when they will regain capacity — or if they ever could again. A durable power of attorney can protect the principal in these situations by giving someone else the capability to handle their important business, medical decisions, and other crucial tasks while they are indisposed.
A non-durable power of attorney, on the other hand, becomes inactive the moment a principal is incapacitated. This designation can be useful in situations where the authority of the agent was provided as a temporary measure or a matter of convenience. However, you may want to consider giving someone you deeply trust, such as a spouse or adult child, a durable power of attorney that allows them to take over from the other agent when you are no longer able to monitor them directly.
All Rio Rancho powers of attorney are considered durable, unless the document explicitly states otherwise (NM Stat § 45-5B-104). If you intend for a power of attorney to be non-durable, make sure you state that it becomes inactive when you have been incapacitated. You can even specify other conditions that would cause it to automatically be revoked, such as the onset of a health issue that causes you to be hospitalized.
A general power of attorney gives your agent a broad range of authority over your personal finances. The exact powers are outlined in New Mexico Statutes Chapter 45 Article 5B Sections 203 – 217. Examples of these powers include the ability to:
There are also many other abilities conferred in a general power of attorney. You are free to restrict these abilities by explicitly removing them from what is otherwise a general power of attorney. Alternatively, you can state that they only have powers you expressly grant, and then list what those powers are.
Applying restrictions in this way creates what is known as a limited or special power of attorney. Limited powers of attorney are typically used for specific functions or situations where a principal has a well-defined plan for what they would need in a situation where they are incapacitated.
Keep in mind that you and your family may end up relying on an agent’s authority to conduct transactions or business that you might not anticipate. Accordingly, it can make sense to give your agent broader authority rather than an extremely limited range of capabilities. Speak to a Rio Rancho estate planning lawyer for guidance on what arrangements could be best for your specific situation, including the goals you hope to achieve by granting power of attorney.
A power of attorney becomes active the moment it is executed, unless the principal specifies a time or condition that would cause it to activate later (NM Stat § 45-5B-109). When the activation of a power of attorney is contingent on a specific condition, this is referred to as a “springing” power of attorney.
The most common condition that would activate a power of attorney is the incapacitation of the principal. However, know that requiring a strict determination of incapacity by a physician or other qualified party can introduce delays in the activation of your power of attorney. Your family members may even fight against the document’s activation, such as by saying that your medical condition is unclear. Or, they can argue that the wording of the document was meant to convey something other than what a standard reading would impart.
For this reason, many estate planning attorneys might caution against the use of a springing power of attorney. You can discuss your concerns and objectives regarding your power of attorney by making an appointment at a reputable Rio Rancho law firm, where you can receive specific advice that can apply to your unique situation.
A financial power of attorney gives your agent the authority to handle financial matters, including the typical abilities described above in the “Limited vs. General Power of Attorney” section.
A healthcare power of attorney, on the other hand, gives your agent the authority to make medical decisions and consent to certain treatments on your behalf.
Examples of abilities conveyed under a typical healthcare power of attorney include:
You can limit your agent’s authority using the power of attorney document itself. You can also include instructions for care, which state your preferences for any of the above medical choices — as well as any other preferences or instructions you wish to include.
The agent who has medical power of attorney can be the same person as the one with financial power of attorney, or they can be two separate people. You can also assign duties to multiple agents, but you then have to specify who has final decision-making power or whether they must vote on a course of action together.
You can create a power of attorney at any time while you have the capacity to understand what permissions you are giving. You can use a statutory power of attorney form to give an agent financial power of attorney, or you can create a custom Rio Rancho power of attorney document with the help of a dedicated estate planning law firm.
Healthcare power of attorney forms are included in advance healthcare directive packets. These documents allow you to make basic choices about the types of care you would want to receive when you are incapacitated.
Keep in mind that most form-based powers of attorney can seem simple on their surface, but in reality, they are going to have a serious impact on your future. As such, you may strongly want to consider creating a personalized power of attorney with the help of a legal professional. You can also reach out to a Rio Rancho lawyer to review any form or template-based powers of attorney you are considering using.
Once you have the power of attorney document complete, you simply need to sign it. The act of signing the power of attorney should be witnessed by a notary, as is encouraged by New Mexico POA law (NM Stat § 45-5B-105). This provides clear proof that your signature is genuine. Notarization requirements differ from state to state, however, so review laws in your own state if you are not executing your document in New Mexico.
Revocation of a power of attorney can be accomplished by physically damaging the existing power of attorney document. However, it is usually advised to document your revocation of POA in writing, so as to leave a clear record of your decision to terminate the agreement.
It is advisable to send notice of your revocation of your power of attorney to any financial institution or medical provider that has authorization of your agent’s status on file.
All agents are legally bound to act lawfully, in good faith, and in line with standards they could reasonably know that you would expect of them.
Agents also have a fiduciary duty to avoid conflicts of interest, perform reasonable due diligence, and act only within the scope of the authorities given to them by the principal (see NM Stat § 45-5B-114). All agents should keep records of their activities and an accounting of all financial transactions or other business conducted in the principal’s name.
An agent can be held liable for violating these duties. Any person affected by their actions or a party with a demonstrable interest in the principal’s finances and overall well-being can file a complaint alleging a breach of fiduciary duty.
You, as principal, can also add duties and obligations for the agent beyond what is typically expected, so long as they are reasonable and justifiable for the purposes of ensuring that their role is faithfully executed. You can, for example, include a clause requiring them to seek outside counsel from a certified professional in situations that could involve legal liability or substantial financial risks.
One of the most important things you can do is to sit down with your agent and talk to them while you have capacity. You can convey your expectations clearly and have them acknowledge what their duties should be. These conversations can not only clear up any ambiguity, but they can also form a record that can be used to hold them accountable for a breach in their duties if the time comes.
New Mexico Financial Law is available to consult with you on all matters pertaining to estate planning, incapacity planning, and powers of attorney. You may understandably feel nervous or overwhelmed at the choices available to you, but you can feel more at ease by working with our experienced legal team.
We can help you put your goals into words, along with the scenarios you want to avoid. With our assistance, you can strike the perfect balance between giving your agent the authority they need while mitigating any risks you are concerned about. We can also help you identify the ideal person to name as your agent, including who may be more appropriate for financial vs medical power of attorney.
Get started with planning for your future and protecting yourself against unexpected emergencies when you call (505) 503-1637 or contact us online to schedule an appointment with a Rio Rancho power of attorney lawyer today.
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