A power of attorney is a legal document that gives someone else permission to make medical decisions or handle your financial affairs. These critical estate planning documents are typically created to protect someone in the event they become incapacitated and are unable to handle these tasks on their own.
A power of attorney can also offer advantages in certain situations where you are not incapacitated. For example, if you need to close on a home sale but can’t make it to the final signing, you can authorize a lawyer or real estate agent to sign for you using a limited power of attorney. A power of attorney may also be necessary for a legal procedure, such as if you are working with a third party to negotiate a tax settlement with the IRS.
Granting someone authority under a power of attorney can be both prudent and risky. To reduce the risks while maximizing the potential benefits, you can work with an experienced lawyer — someone in Santa Fe who has created many powers of attorney in the past and who understands the complex laws surrounding them.
When you’re looking for help, New Mexico Financial Law can guide you. From weighing your options for the right power of attorney to selecting someone trustworthy to represent you, an experienced lawyer from our Santa Fe law firm can be there to help every step of the way. To get the process started and schedule a no-obligation consultation, call us at (505) 503-1637 or contact us online today.
In a nutshell, a power of attorney is like a permission slip. It permits a person you trust to stand in for you in situations where you cannot — or do not wish to — handle a task on your own, as with a general power of attorney for financial or legal matters.
Every power of attorney involves two main parties:
Agents (also sometimes called a proxy or attorney-in-fact) are bound by a fiduciary duty to act only in the principal’s interest. They must follow the rules set by the principal and not exercise any powers that lie outside the scope of the power of attorney document.
The principal can define or restrict their agent’s powers in nearly any way they choose. They can require their agent to follow a very strict routine with no deviations. Alternatively, they can give their agent wide discretion, only guiding their actions with general goals and guidelines.
Because powers of attorney can be highly customized, principals should carefully consider what the best arrangements might be for their unique situation. By explaining their goals, concerns, and key details about their life situation to a lawyer in Santa Fe, they can receive tailored recommendations for the best way to structure their power of attorney.
Some of the most important decisions a principal can make include:
The information in the sections below can provide more context for these decisions. However, only a lawyer can provide specific advice regarding your unique situation, so make sure to reach out to a law firm in Santa Fe if you have questions about a power of attorney or would like guidance on a possible course of action.
A financial power of attorney authorizes an agent to handle the principal’s money, accounts, business transactions, investments, and legal affairs. The principal can define the scope of the agent’s authority, or they can authorize general powers under a statutory power of attorney.
A medical power of attorney authorizes an agent to make care decisions on behalf of the principal. They can request a specific provider, consent to or deny proposed courses of treatment, view medical documents, and handle other matters that the principal can no longer manage on their own.
An agent with medical power of attorney — who is sometimes called a healthcare decision-maker or proxy — can be guided by instructions left by the principal. For example, the principal can state whether they would like to be resuscitated after cardiac arrest, whether they would want a feeding tube if they were in a terminal state, and whether they wish to donate their organs or tissues after their death.
These instructions for healthcare are sometimes called a “living will.” They are included in an advance healthcare directive along with the medical power of attorney and a designation of the principal’s primary physician.
A thorough approach to incapacity planning would encourage someone to issue both types of powers of attorney. The agent can be the same person in both cases, or the principal can nominate two different people to handle financial and medical decision-making duties separately.
You can discuss your options for issuing a power of attorney in Santa Fe, along with which ones best suit your goals and long-term plans, by meeting with an experienced lawyer.
A durable power of attorney remains in effect even when you have been incapacitated. A non-durable power of attorney, on the other hand, is revoked once a determination of incapacity has been made.
“Incapacity” is defined differently for a financial power of attorney compared to a medical one.
Most healthcare powers of attorney are durable, as the principal would not usually need to delegate medical decisions or authorizations to another party. Medical powers of attorney also don’t typically activate until a patient is incapacitated.
Note that, if a medical power of attorney were to be in effect while the patient still had mental and legal capacity, then they could overrule anything their agent tried to do until a finding of incapacity was made.
Many estate planning lawyers in Santa Fe would recommend that their clients create a durable financial power of attorney to prepare for emergencies. By having one, you can ensure that someone can pay your bills, manage your investments, support your family, and handle other critical business while you are incapacitated.
Without durability, you and the people you care about could suffer should you suddenly become incapacitated. To access accounts, authorize transactions, or handle matters like applying for a benefits program, your loved ones would need to obtain guardianship or conservatorship. The process of appointing a guardian or conservator can be lengthy and complex. Courts require testimony from mental health experts to evaluate the individual’s condition before they would declare that a guardian or conservator is necessary.
Having a durable financial power of attorney in place acts as a guardianship alternative. An agent can begin handling the principal’s affairs without delays, assuming that the document was already in effect and “non-springing.”
If the document were a springing power of attorney, it could be activated once the principal is declared incapacitated. Often, a doctor is consulted to determine if this is the case.
The principal can also describe other methods for evaluating their mental condition and determine if they have been incapacitated. For example, they could require a consensus among their close family members, a finding by a trusted professional advisor, or evidence of an incident where they badly mismanaged their funds.
The type of financial power of attorney you choose is ultimately up to your comfort level, your perceived risks, and your objectives. You can consult with an experienced legal attorney in Santa Fe to get insights and personalized recommendations on what the best strategy might be.
Your agent is bound by law to represent your best interests and to make all reasonable efforts to act in line with your expectations — express or implied.
State law (NM Stat § 45-5B-114), which is based on the Uniform Probate Code, defines that an agent has a fiduciary duty to:
In addition to these statutory duties, the principal can further define, add to, or restrict the agent’s authority and responsibilities. An agent can be required to do — or not do — anything, so long as the requirement is reasonable and compliant with the applicable laws and regulations.
If an agent deviates in their duties, someone with an interest in the principal’s well-being can allege a breach of fiduciary duty and request relief from a Santa Fe court. This relief could consist of an injunction to halt specific actions, an order for the agent to reverse a transaction, an order for the agent to be removed, or other appropriate measures.
Preventing abuse by a fiduciary is a critical component of elder law. If you suspect that someone, including an agent with power of attorney, is taking advantage of you or a loved one, you should report it immediately to New Mexico Adult Protective Services.
New Mexico Financial Law passionately serves its clients in Santa Fe and throughout the state. If you are interested in making plans so that someone can handle your most important affairs when you cannot, we can assist you with creating a power of attorney. An experienced lawyer from our firm can explain all of the key concepts, describe your options for customization, draft your power of attorney document(s), and offer strategies that increase the chances of a positive overall outcome.
By making plans today, you and your family can be less worried about what happens tomorrow. Get the peace of mind you deserve by talking to a knowledgeable lawyer in Santa Fe about power of attorney when you call (505) 503-1637 or contact us online to schedule a free case review.
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