Frequently Asked Questions About Powers of Attorney

What Is A Power of Attorney?

A power of attorney authorizes another person (your “Agent”) to make decisions concerning your property for you (the “Principal”).  Your Agent will be able to make decisions and act with respect to your property (including your money) whether or not you are able to act for yourself.

Who Can Sign a Power of Attorney in Alabama?

Any competent adult can sign a power of attorney in Alabama.

When Does My Power of Attorney Become Effective?

Your power of attorney becomes effective immediately unless you specify that it starts at a later date or after some future event takes place. For example, you can state in  your power of attorney that it only becomes effective  after you become incapacitated or incompetent.

What Does It Mean for a Power of Attorney to Be “Durable”?

A “durable” power of attorney continues in effect even after a person becomes incompetent, disabled, or incapacitated.

Unless stated otherwise, a power of attorney terminates when the maker (the “principal”) becomes incompetent.  However, you likely need an agent most when you’re incapacitated! To ensure that your power of attorney is effective when you’re most likely to need it, talk to your attorney about creating a “durable” power of attorney.

What Can A Power of Attorney Be Used For?

Lots of things.  A power of attorney can be for a specific purpose, narrowly tailored to a single transaction or category of business, or it can be “general,” and include broader powers that cover a variety of situations. A power of attorney can be used to give someone the power to sign legal documents (like a contract) on your behalf, or to conduct your business or your financial affairs.  For example, a power of attorney can give someone the power to sell your property (like your house or a car) for you.

A separate document – a Durable Power of Attorney for Health Care, or a health care proxy designation in an advance directive – may give someone the power to make healthcare decisions for you.  However, a general power of attorney does not cover healthcare situations.  You should speak to an estate planning attorney to be sure you understand what documents are required to give someone the power to make healthcare decisions for you.

What Powers Are Included in a General Power of Attorney in Alabama? 

If the POA gives a “grant of general authority” then your agent can act for you  with respect to the following subjects:

  • Real Property as defined in Ala. Code Section 26-1A-204
  • Tangible Personal Property as defined in Section 26-1A-206(5)
  • Stocks and Bonds as defined in Section 26-1A-206
  • Commodities and Options as defined in Section 26-1A-207
  • Banks and Other Financial Institutions as defined in Section 26-1A-208
  • Operation of Entity or Business as defined in Section 26-1A-209
  • Insurance and Annuities as defined in Section 26-1A-210
  • Estates, Trusts, and Other Beneficial Interests as defined in Section 26-1A-211
  • Claims and Litigation as defined in Section 26-1A-212
  • Personal and Family Maintenance as defined in Section 26-1A-213
  • Benefits from Governmental Programs or Civil or Military Service as defined in Section 26-1A-214
  • Retirement Plans as defined in Section 26-1A-215
  • Taxes as defined in Section 26-1A-216
  • Gifts as defined in Section 26-1A-217

The grant of general authority covers most things that people need taken care of if/when they become incompetent or incapacitated, and allows your agent to pretty much act like you would act for yourself.

Where Should I Keep My Power of Attorney?

Keep the original safe but accessible, maybe in a desk with your other important papers.  Tell your agent where you store the original. Do not store your power of attorney in a safe deposit box unless your agent also has access to the box.  Remember that copies work just as well as the original. You should give a copy of your power of attorney to your agent as named in the document and to any successor agents you name.

Who Should Be My Agent?

You should choose someone you trust.  Your agent must be a competent adult, but – despite what you may have heard – your agent does not need to be an lawyer.

Can I Name More Than One Agent in my Alabama Power of Attorney?

Yes. You can name co-agents in a single POA document.  Co-agents are not required to act together (agree before acting) unless you make that a requirement in the Special Instructions section of the POA.

Does The Person I Appoint As My Agent Have to Accept?

No.

What If My Agent Dies or Becomes Incompetent or Unable To Act For Me?

If your agent dies or becomes unable to act for you then your power of attorney ends unless you have named a “successor agent” (a person to serve as a backup for your first choice of agent).  You can even name a second successor agent in  your POA.

I Have Named My Spouse as My Agent in My Power of Attorney.  What Happens If We Get Divorced?

In Alabama, a power of attorney granted to a spouse terminates upon divorce or dissolution of marriage unless the power of attorney specifies otherwise.

If you get divorced and your power of attorney was your spouse you might consider granting another trusted family member or friend your power of attorney to help you should you become incapacitated.

I Already Have a Will.  Do I Still Need a Power or Attorney?

Yes.  Your Will only takes effect after your death.  Your power of attorney is effective while you are living.

How Often Should I Review My Power of Attorney?

It’s a good idea to review any power of attorney you have signed every time you review your will.  Consider reviewing your entire estate plan, including your powers of attorney, at least once a year and think about whether your wishes have changed.  You may need to sign a new power of attorney if your agent or alternate agent dies or becomes incompetent, if your wishes change, or if the law in your state regarding powers of attorney changes.

What If I Change My Mind After I Sign My Power of Attorney?

You can change your mind at any time after you sign your power of attorney. You can also revoke your grant of authority to an agent by giving him written notice that you are revoking his or her powers.  When you revoke a power of attorney it’s also a good idea to give notice of the revocation to any third parties where your agent might try to use the POA, such as your bank.

Who Manages My Affairs For Me If I Become Incompetent and Do Not Have a Durable Power of Attorney?

While some of your affairs may be managed by your loved ones without a POA or court involvement, it may become necessary for a guardian or conservator to be appointed for you.  People may petition the court to be appointed as your guardian and/or conservator, and if competing petitions are filed the court will decide who among the applicants should be selected, or if instead a third party should be appointed.

Why Should I Consider Signing a Power of Attorney?

It’s a good idea to at least have a power of attorney that “springs” into effect upon your incapacitation so that someone can take control of your affairs if you are unable to do so.

Many couples like to have durable powers of attorney with immediate effective dates because they provide convenience: family business can be conducted promptly even when one spouse is out of town or otherwise unavailable.

How Long Will My Power of Attorney Last?

In general it will last until you revoke it , until your Agent resigns or is unable to act for you, or until you die (after your death your will controls what happens to your property).  However, you can include special instructions terminating your power of attorney at a certain time, such as a date in the future or after a specific event.

What Else Can My Alabama Power of Attorney Document Do for Me?

You can also  use your Power of Attorney to nominate a guardian and conservator for yourself.  If you ever become incompetent or incapacitated and need a guardian and conservator (in addition to your agent in your durable power of attorney) then the court will strongly consider your nomination when selecting someone to serve as your guardian and/or your conservator.

Should I Use an Online Form for My Power of Attorney?

It’s a good idea to work with an attorney to prepare your power of attorney document.  Online “one-size-fits-all” documents may have problems you won’t recognize, or may not come with instructions that are clear enough to help you fill them out correctly. An attorney can help you make sure that your POA accurately reflects your wishes and is filled out in compliance with Alabama law.

My Father Is Incompetent.  I Need to Get Power of Attorney Over Him to Help With His Affairs.  What Should I Do?

Unfortunately, your father cannot sign a power of attorney if he is incompetent.  You will have to ask the court to appoint you as his guardian and/or conservator.  Guardianship/Conservatorship proceedings are costly and take valuable time.  That’s why it’s a good idea to sign a durable powers of attorney in favor of someone you trust while they are still competent to do so.

What Can I Do as an Agent Under a Power of Attorney in Alabama?

It depends. The Power of Attorney document should specify what acts you are  permitted to perform.  The POA may be for a limited or specific purpose, in which case the answer is simple and will be spelled out in the POA.

If the POA gives a “grant of general authority” then you as agent can act for the principal with respect to the following subjects:

  • Real Property as defined in Ala. Code Section 26-1A-204
  • Tangible Personal Property as defined in Section 26-1A-206(5)
  • Stocks and Bonds as defined in Section 26-1A-206
  • Commodities and Options as defined in Section 26-1A-207
  • Banks and Other Financial Institutions as defined in Section 26-1A-208
  • Operation of Entity or Business as defined in Section 26-1A-209
  • Insurance and Annuities as defined in Section 26-1A-210
  • Estates, Trusts, and Other Beneficial Interests as defined in Section 26-1A-211
  • Claims and Litigation as defined in Section 26-1A-212
  • Personal and Family Maintenance as defined in Section 26-1A-213
  • Benefits from Governmental Programs or Civil or Military Service as defined in Section 26-1A-214
  • Retirement Plans as defined in Section 26-1A-215
  • Taxes as defined in Section 26-1A-216
  • Gifts as defined in Section 26-1A-217

What Can’t I Do as an Agent Under a Power of Attorney in Alabama?

An agent under an Alabama POA cannot do the following things unless s/he is given the specific power to do so in the POA:

  • Create, amend, revoke, or terminate an inter vivos trust, by trust or applicable law
  • Make a gift which exceeds the monetary limitations of Section 26-1A-217 of the Alabama Uniform Power of Attorney Act, but subject to any special instructions in this power of attorney
  • Create or change rights of survivorship
  • Create or change a beneficiary designation
  • Authorize another person to exercise the authority granted under this power of attorney
  • Waive the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan
  • Exercise fiduciary powers that the principal has authority to delegate

Most importantly, you cannot act in your own self-interest but instead must be loyal to the principal and make a good faith effort to act in his or her best interest.  This responsibility is called your “fiduciary duty.”

Not sure whether you can perform a particular act?  Our attorneys are happy to help you navigate the process and determine what’s appropriate.  Call us at 205-553-5353 to discuss  your authority.

I’ve Been Named as an Agent in a Power of Attorney. I’m Ready to Conduct Business for the Principal… What Do I Do?

First, make certain that the power of attorney gives you the authority to do what you’re planning to do.  After you’re sure that you have the appropriate authority, take the power of attorney document  (or a copy of it) to the third party. Explain to the third party that you are acting under the authority of the Power of Attorney and are authorized to do this particular act. Some third parties may ask you to sign a document stating that you are acting properly. You may wish to consult your attorney prior to signing it. The third party should accept the Power of Attorney and allow you to act for the principal. When acting as an agent, always make that fact clear when signing any document.

Can I Be Paid for My Services as Someone’s Agent Under a Power of Attorney in Alabama?

An agent is entitled to reimbursement of reasonable expenses and reasonable compensation unless the principal states otherwise in the Special Instructions section of the POA.

How Should I Sign When Acting as Agent?

You always want it to be clear from your signature that you are not signing for yourself but are, instead, signing for the principal. If you only sign your own name you may be held personally accountable for anything you sign.

So, it is best to sign as follows:

Jane Doe

By:      [Your Signature]                    

[Your Name], as Agent

In this example Jane Doe is the principal.

The Third Party Will Not Accept the Power of Attorney.  What Should I Do?

Sometimes a third party will want to review the power of attorney with their legal counsel before accepting it. This is normal and should be expected when the transaction  you are attempting to make involves a lot of money.

If the third party refuses to accept the power of attorney, or delays acceptance for an unreasonable amount of time, you should call an attorney to discuss your options.  Usually the problem can be solved by a quick phone call from your attorney to the third party.

Do you need help dealing with a third party who will not accept a power of attorney?  Call our office at 205-553-5353 to see if we can assist you.

What Are My Duties as an Agent/Attorney-in-Fact in Alabama?

You must:

  • do what you know the Principal reasonably expects you to do with the Principal’s property or, if you do not know the Principal’s expectations, act in the Principal’s best interest;
  • act in good faith;
  • do nothing beyond the authority granted in the power of attorney; and
  • disclose your identity as an agent whenever you act for the Principal by writing or printing the name of the Principal and signing your own name as “Agent”

Unless the Special Instructions in the power of attorney state otherwise, you must also:

  • act loyally for the Principal’s benefit;
  • avoid conflicts that would impair your ability to act in the Principal’s best interest;
  • act with care, competence, and diligence;
  • keep a record of all receipts, disbursements, and transactions made on behalf of the Principal;
  • cooperate with any person that has authority to make health care decisions for the Principal to do what you know the Principal reasonably expects or, if you do not know the Principal’s expectations, to act in the Principal’s best interest; and
  • attempt to preserve the Principal’s estate plan, if you know the plan, and preserving the plan is consistent with the Principal’s best interest.

What is “fiduciary responsibility”?

As an agent, you are fiduciary to your principal. A “fiduciary” is a person who has the responsibility for managing the affairs of another, even if only a part of that person’s affairs are being managed. A fiduciary has the responsibility to deal fairly with the principal and to be prudent in managing the principal’s affairs. You should be loyal to the principal and act in good faith at all times with respect to his or her affairs.

You, as an agent, are liable to third parties only if you act imprudently or do not use reasonable care in performing your duties. If ever you are acting as an agent and are unsure as to whether you are doing the right thing, seek out professional advice not only to protect yourself but to protect the principal.

When Can I Stop Acting as Agent/Attorney-in-Fact?

If you no longer wish to act as the principal’s attorney-in-fact you should notify him or her in writing.

You must stop acting on behalf of the Principal if you learn of any event that terminates the power of attorney or your authority under the power of attorney.  Events that terminate a power of attorney or your authority to act under a power of attorney include:

  • death of the Principal;
  • the Principal’s revocation of the power of attorney or your authority;
  • the occurrence of a termination event stated in the power of attorney; or
  • the purpose of the power of attorney is fully accomplished (for example, if the power of attorney is for  a limited purpose or a single transaction).

Can I Hire or Have Other People To Help Me Carry Out My Duties as Attorney-in-Fact?

You may hire accountants, lawyers, brokers, or other professionals to help you with your duties., but you can never delegate another person to act for you as agent. The Power of Attorney was given to you by the principal and you do not have the right to give that power to anyone else unless the POA specifically provides otherwise

If I am Someone’s Agent Under a Power of Attorney Can I Change His or Her Last Will and Testament?

No.  You cannot make or change the principal’s Last Will and Testament.  You may have been granted authority under the POA to make conduct other estate planning business for the principal, but you cannot make or change his will.  For example, sometimes a POA grants the agent the power to change a beneficiary designation on the principal’s life insurance policies.

Do you have questions about an Alabama Power of Attorney that names you as agent? Or are you ready to sign a Power of Attorney? .  Call us at 205-553-5353 or come by our Tuscaloosa office to find out how we can help.