Power of Attorney

In general, you can create a document called a power of attorney that allows another to act in your name the same as if you were present.  That person to whom the power is granted is called the agent. The person creating the power of attorney is called the principal.  The agent owes the principal a fiduciary duty to act in the best interests of the principal. This duty is the highest duty imposed by law.

Powers of attorney can empower the agent to perform many acts.  But, under Texas law an agent may not create a last will and testament for the principal.  There are other limitations on the agent’s power.  But, unless limited by law or by the document creating the power of attorney, the agent will often have great power.  No power of attorney should be created in an agent you do not trust.  Often, an agent acting under a power of attorney is called an “attorney in fact.”

        The relationship between powers of attorney and guardianship law in Texas is intertwined.  In short, if there is a general power of attorney that is durable, then a guardianship of the estate of a person may not be necessary.  In fact, many courts in Texas will not allow the creation of a guardianship of an estate of a person if a valid durable power of attorney exists.

        A guardianship can be established on a person and on a person’s estate/property.  If the person, for example, suffers from dementia such as Alzheimer’s disease one might need to seek a court ordered guardianship to restrict the person’s ability to leave a health care facility.  Additionally, that same person might have an estate or bank accounts that need to be managed.  If so, a court ordered guardianship may be necessary to sign documents and checks among other matters.  Guardianships are expensive in relation to the cost of a valid durable power of attorney.  And, a properly drafted durable power of attorney can obviate the need for a guardianship during the incapacity of a person. 

Imagine that you have been in a car wreck.  You did not create a durable power of attorney before the wreck.  You are now mentally incapacitated.  You cannot create a power of attorney now since you do not have the legal mental capacity to create a power of attorney.  Your family will have to seek a court ordered guardianship to manage your estate (which could be large if your injuries were wrongfully caused and a suit recovers money from the wrongdoer) and the time consuming and expensive procedure will begin – in court.  Contrast this to someone who created a durable general power of attorney before they became incapacitated.  The agent may now manage the lawsuit that will be brought in the name of the injured and incapacitated person and perform other acts without court intervention.  Time and money are saved.

If one has a power of attorney, it might not be durable.  If so, it ceases to operate on the mental incapacity of the principal.  If the power of attorney is not a general power of attorney, it may not allow certain acts to be performed by the agent even if it is a durable power of attorney.  If the power of attorney is durable, it continues to be effective during the mental incapacity of the principal.

Powers of attorney have many other uses.  You can empower someone, with a properly drafted power of attorney (usually limited, durable and specific to the matter to be accomplished) to sell real estate for you while you are out of the country, for example.

Texas allows the creation of springing durable powers of attorney, whether limited or general in nature.  It “springs” to life when the principal becomes incapacitated.  If it is not a springing power of attorney and is merely a durable power of attorney, the agent is empowered upon delivery of the power of attorney to the agent or upon some other event that conveys the principal’s intent to grant the power to the agent.  One advantage of a springing power of attorney is that the agent has no power until the principal becomes incapacitated.  At a minimum, this will eliminate the worry of granting immense power to an agent before one becomes incapacitated.  It will also eliminate the worry of losing the power of attorney that may have been created in 2002 and not given to the agent until the need arises let’s say in 2010.  Remember that when the need arises, i.e., incapacity, you won’t know where the power of attorney is located in all probability since you will be incapacitated.

Finally, a power of attorney ceases to operate upon death.  The agent’s power ceases upon death of the principal and could cease upon death of the agent if the agent is a person as opposed to an entity and if no successor agent is named in the power of attorney.  In this regard, anyone dealing with an agent will want to know if the principal is alive.  For this reason and others, a power of attorney is not a substitute for a valid will.  A will begins to operate upon death; a power of attorney ceases to operate at death.  One should have both documents.

This essay is not intended to be legal advice to anyone.  A lawyer has to know the facts and all the facts before giving legal advice.  Even though some facts are stated in this essay, since there is no client all the facts have not been gathered.  Hence, no legal advice can be taken from this essay.  The foregoing essay is a general academic discussion of some of the aspects of powers of attorney relating to Texas law only using some hypothetical facts.  Texas law changes.  And, sometimes it changes faster that this article will be updated.  Therefore, for this additional reason, the following is not legal advice.  By:  Leonard E. Cox, Attorney at Law, State of Texas. www.LawyerCox.com copyright 2002.