Arizona Powers of Attorney: Expert Guidance for Complex Legal Matters
Powers of Attorney (POAs) are a critical aspect of estate planning and elder law in Arizona. At Berk Law Group, we specialize in resolving disputes and issues related to POAs, guardianships, conservatorships and other issues. We offer expert advice and advocacy with compassion.
Terminology
Understanding the basic terminology associated with a power of attorney is crucial for both creating an effective document and ensuring that the appointed agent acts in accordance with the principal’s wishes and best interests. Here are some key terms and their explanations:
1. Principal: The individual who creates the Financial Power of Attorney and appoints another person to manage their financial affairs. The principal must be of sound mind when executing the document.
2. Agent or Attorney-in-fact: The person designated by the principal to make financial decisions on their behalf. Despite the term “attorney,” the agent does not have to be a lawyer. The agent’s authority is defined by the terms of the POA document.
3. Durable Power of Attorney: A power of attorney that remains in effect even if the principal becomes incapacitated or unable to make decisions themselves. Without the specification of “durable,” a POA would typically end if the principal becomes incapacitated.
4. Springing Power of Attorney: This type of POA becomes effective only under certain conditions, typically when the principal becomes incapacitated. It “springs” into effect based on the occurrence of a specified event.
5. Limited or Special Power of Attorney: A POA that grants the agent authority to conduct specific acts or make decisions about specific matters, rather than handling all financial affairs of the principal.
6. General Power of Attorney: Contrary to the Limited POA, this grants the agent broad powers to handle a wide range of the principal’s financial affairs.
7. Incapacity or Disability: A condition in which the principal is legally considered unable to make informed decisions due to mental or physical disability. The definition and determination of incapacity can vary, but it often requires a medical assessment.
8. Revocation: The process by which the principal cancels or nullifies the Power of Attorney, taking back the authority granted to the agent. Revocation must be done while the principal is still competent and often requires notifying the agent and any institutions that were informed of the POA.
9. Successor Agent: An alternate agent designated in the POA document to take over if the original agent is unable or unwilling to serve.
What is a Power of Attorney in Arizona
A power of attorney is a written document where one person (the principal) gives authority to act on his/her behalf to another person (the agent). Powers of attorney may be general or specific (limited to a particular transaction or matter).
Powers of attorney may contain a termination date or continue no matter how much time has elapsed. All powers of attorney are revocable, meaning they can be cancelled. Generally, a power of attorney that was valid when executed in another state is recognized and valid in Arizona.
What is a durable power of attorney?
Powers of attorney may also be durable. Under a durable power of attorney, the power granted continues even if/after the principal becomes disabled or incapacitated.
Types of POAs
In Arizona, individuals may execute powers of attorney for various types of matters, including:
- Financial and other affairs
- Health care
- Mental health care
In order to be valid, all Arizona powers of attorney must meet certain statutory requirements.
Common Disputes and Issues over Powers of Attorney
Abuse of powers of attorney may create problems. Disputes often arise in relation to powers of attorney, including whether the principal had capacity to execute the power, whether the agent used intimidation or deception to obtain the power and, most commonly, whether the agent abused the powers granted, such as where the agent uses the principal’s assets other than for the direct and sole benefit of the principal.
Here at Berk Law Group, we regularly handle those and many other legal disputes involving powers of attorney in Arizona.
Sign Up For Our Newsletter
Contact Us Today
Who should you appoint as agent under a power of attorney?
One of the most important and difficult decisions can be who to select to appoint as your agent under your power of attorney. Determining the best person to grant power of attorney to requires careful consideration and trust. Ideally, you should choose someone who has your best interests at heart and possesses the responsibility to make decisions on your behalf. This individual should be someone you have a close relationship with, such as a spouse, a reliable family member, or a trusted friend.
It is crucial to ensure that the person you select is mentally competent and legally eligible to take on this responsibility. Additionally, opting for a legal professional, such as a lawyer, who has expertise in matters of power of attorney can provide an added layer of security and peace of mind. Ultimately, the key is to choose someone who you firmly believe will act in your best interests and carry out your wishes diligently.
Requirements for Valid Arizona Durable Powers of Attorney
For a durable power of attorney to be valid in Arizona, it must:
- be in writing;
- be signed by an adult as principal;
- clearly identify another adult as agent;
- specify whether the power is effective when the principal signs it or state that it becomes effective if the principal is later disabled or incapacitated;
- if the power of attorney is effective on signing, in order to be durable, it must specify that it remains effective if the principal is later disabled or incapacitated;
- state a definite termination date or that the power remains effective no matter how much time passes;
- be witnessed by a person other than the agent, the agent’s spouse, the agent’s children or the notary public; and
- be executed and attested to by the principal and witness before a notary public as shown by a notary’s certificate in the form required by law.
Some of the requirements do not apply if the principal granting the power is not a natural person, such as a corporation or a limited liability company, or where the power is “coupled with an interest.” In this context, “‘power coupled with an interest’ means a power that forms a part of a contract and is security for money or for the performance of a valuable act.”
Arizona also permits individuals to appoint agents for health care decisions, to make mental health care decisions and/or to make funeral and disposition arrangements in the event of the principal’s death. The statutes include specific requirements for health care and mental health care powers of attorney that are similar to those for durable powers of attorney.
If you want to execute a power of attorney, they can and should be customized to fit your situation. So, it is a good idea to consult with an experienced estate planning attorney if you want to adopt a power of attorney. While our firm does not prepare powers of attorney, we can refer you to several attorneys who do.
What is the most common power of attorney?
The most recommended type of power of attorney for individuals is a general durable financial power of attorney. This specific type of power of attorney grants your designated agent a wide range of powers to act on your behalf, even in the event that you become unable to handle your own finances. It provides flexibility and covers various aspects of financial management. It is advisable to consult with an attorney to tailor the general durable power of attorney to meet your specific needs and requirements. The attorney can make necessary adjustments and add additional provisions to ensure it aligns with your circumstances and preferences.
Are there any decisions an agent under a power of attorney may not make?
Yes. A legal power of attorney is restricted from making three specific types of decisions. Firstly, they cannot alter or nullify a valid will that has been legally established. Secondly, they are prohibited from acting in a manner that goes against the best interests of the principal. Lastly, the agent may not make any decisions on behalf of the individual after their passing.
Powers of Attorney and Conservatorship/Guardianship
People typically adopt powers of attorney to avoid the need to have the Court appoint a guardian or conservator for them if they become incapacitated. However, sometimes it is still necessary or appropriate to have a guardian or conservator appointed for a principal who has an agent under a power of attorney.
For example, sometimes third-parties, such as medical providers or financial institutions, will not honor a power of attorney and insist on only following the directions of an agent who is appointed by the Court as guardian or conservator. The statutes permit the principal to nominate, in the power of attorney, who the principal wants the Court to appoint as guardian or conservator if those protective proceedings are filed.
If the Court appoints a conservator to manage the financial affairs of someone who has a power of attorney, the agent under the power of attorney must account to the conservator. The conservator also has the same power to revoke or amend the power of attorney that the principal would have if the principal were not disabled or incapacitated.
Effect of a Valid Power of Attorney
If the power of attorney is valid, all acts done by the agent during any time when the principal was disabled or incapacitated have the same effect as if the principal had done them and was not incapacitated or disabled. So, the agent’s acts inure to the benefit of and bind the principal and the principal’s successors as if the principal were not incapacitated or a person with a disability.
A POA does not deprive the principal of the legal right to make their own decisions.
People who are appointed agent under a POA sometimes think that they may override the principal’s right to make their own decisions. That is not the case. Granting someone authority under a POA does not deprive the person granting the authority (the principal) of their own right to make their own decisions.
Disputes sometimes arise, for example, where the agent believes that the person should be placed in a nursing home or assisted living, but the principal refuses. Until and unless the Court declares the principal incapacitated and appoints a guardian to make decisions, the principal has the legal right to live wherever they want and to make their own decisions.
Foreign Powers of Attorney – Powers of Attorney Executed Outside Arizona
A power of attorney executed in another jurisdiction of the United States is valid in Arizona if the power of attorney was validly executed in the jurisdiction in which it was created.
However, some third-parties, such as doctors, hospitals, banks and other financial institutions or title/escrow companies, may not accept an out-of-state power of attorney in Arizona even if it was validly created in the other state. In that case, the principal, if he/she has capacity, would need to sign a new Arizona power of attorney. If the principal lacks capacity to do so, the only option may be guardianship and/or conservatorship.
Termination of Powers of Attorney
A power of attorney terminates on the date specified (if any), on revocation or upon the principal’s death. However, an agent that acts in good faith without actual knowledge of the death of the principal still binds the successors of the principal. Similarly, if the power of attorney is not durable, an agent that acts in good faith without knowledge that the principal has become disabled or incapacitated still binds the principal and the principal’s successors.
Disputes Involving Powers of Attorney
Problems and disputes regularly arise regarding Arizona powers of attorney. For example:
Principal Lacked Capacity to Execute the Power of Attorney
Unlike other types of instruments, such as wills and trusts, in a court proceeding to determine the validity of a durable power of attorney, a principal is not presumed to have had capacity to execute the power of attorney.
Rather, pursuant to A.R.S. § 14-5506(B), in a dispute over the validity of the power of attorney, the agent bears the burden of proving that the principal had capacity to execute the power:
In a civil proceeding, if the party challenging the validity of a power of attorney on the grounds of lack of capacity proves by a preponderance of the evidence that, at the time the power of attorney was executed, the principal was a vulnerable adult, the agent has the burden of proving by clear and convincing evidence that the principal had capacity. In a civil proceeding, if the party challenging the validity of a power of attorney on the basis of lack of capacity does not prove by a preponderance of the evidence that, at the time the power of attorney was executed, the principal was a vulnerable adult, the agent has the burden of proving by a preponderance of the evidence that the principal had capacity.
The Arizona courts have the jurisdiction to declare which powers of attorney are valid and operative. So, if you question whether a principal had the capacity to execute a power of attorney, you can file an action in Arizona probate Court to have the Court to declare whether the power is valid.
Agent Used Intimidation or Deception to Get the Principal to Sign the Power of Attorney
Under A.R.S. § 14-5506(A), “if the agent acted with intimidation or deception in procuring the power of attorney or any authority provided in the power of attorney, the agent is subject to prosecution under title 13 and civil penalties pursuant to § 46-456.” Section 46-456 is part of Arizona’s Adult Protective Services Act (APSA). APSA includes stringent standards by which a person acting in a position of trust and confidence, such as an agent under a power of attorney, to a vulnerable adult must handle the vulnerable adult’s affairs. If the agent breaches those duties, he/she can be held liable for substantial damages.
Agent Abused the Powers Granted to Benefit the Agent or Someone Other than the Principal
An agent under a power of attorney has fiduciary duties to the principal. Basically, a fiduciary is required to be impartial and protect the principal’s interests above their own. Unfortunately, there are often cases where the agent uses a power to make gifts or other transfers of money or property to himself or someone else, even though the power did not specifically grant authority to do so, and there was no benefit to the principal. An agent who misuses a power may be subject to claims for financial exploitation, breach of fiduciary duty, conversion (civil theft) and others.
Disadvantages of Powers of Attorney
A power of attorney, although a valuable legal instrument, does come with certain disadvantages that warrant consideration. One of the primary concerns is the potential vulnerability to abuse and the possibility that the intended legal authority may not be used as desired. This can leave the individual exposed to exploitation or fraudulent activities, particularly in cases where there is no direct oversight of the agent’s actions, potentially resulting in elder financial abuse.
Moreover, it is important to note that a power of attorney does not encompass the management and distribution of assets after death. Unlike other legal instruments like wills and trusts, a power of attorney does not address the specific provisions for handling assets and affairs once the individual passes away. This absence of clarity and guidance can lead to complications and disputes among beneficiaries or family members, potentially causing additional stress during an already difficult time.
Furthermore, it is crucial to understand the legal dynamics surrounding the validity of a durable power of attorney. In court proceedings, the burden of proof lies on the agent to demonstrate that the principal had the capacity to execute the power of attorney. If a dispute arises regarding the power of attorney’s validity, the agent must provide clear and convincing evidence of the principal’s capacity, especially if the principal is proven to be a vulnerable adult at the time of execution.
In cases where the agent employed intimidation or deception to procure the power of attorney or any authority within it, there are legal consequences. The agent can face prosecution under applicable laws and civil penalties, such as those outlined in Arizona’s Adult Protective Services Act (APSA). This legislation sets stringent standards for individuals in positions of trust, like agents under a power of attorney, to ensure they handle the affairs of vulnerable adults responsibly. Failure to fulfill these duties can result in substantial damages.
Finally, it is crucial to acknowledge the fiduciary duties that agents hold towards principals under a power of attorney. Agents have a legal obligation to act impartially and prioritize the principal’s interests above their own. Unfortunately, instances arise where agents misuse their authority, making unauthorized transfers or gifts for personal gain or benefitting someone other than the principal. Such actions can give rise to claims of financial exploitation, breach of fiduciary duty, or even civil theft.
In summary, while a power of attorney serves important purposes, it is essential to be aware of its potential disadvantages. These include the risk of abuse, the lack of provisions for post-death asset management, the burden of proof in determining validity, potential legal consequences for agents employing intimidation or deception, and the fiduciary duties agents must uphold. Understanding these potential downsides can help individuals make informed decisions and take appropriate precautions when utilizing a power of attorney.
Considerations in Preparing and Executing a Power of Attorney
It is important to note that unlike other types of instruments, such as wills and trusts, a principal is not presumed to have had capacity to execute a power of attorney. This means that in a dispute over the validity of the power of attorney, the agent must provide evidence to prove that the principal had the necessary capacity.
It’s worth noting that the Arizona courts have the jurisdiction to determine the validity and operability of powers of attorney. If there are any doubts about the principal’s capacity to execute the power of attorney, it is possible to file an action in Arizona probate court. The court can then declare whether the power of attorney is valid or not. You may also call on the Court to evaluate whether an agent has abused their authority under a power of attorney.
While legal considerations are essential, it’s equally important to take practical aspects into account when selecting an attorney-in-fact. Here are some key questions you should consider in adopting a power of attorney and selecting an agent:
- If something does happen to me, do you think you will be able to focus on the tasks that you need to complete, or will you be overwhelmed by emotion?
Emotions can play a significant role when dealing with personal or business matters of a loved one. It is important to have an open conversation with potential attorneys-in-fact about their emotional capacity and ability to focus on the tasks at hand in the event something happens to you. This ensures that they are prepared to handle the responsibilities objectively and effectively. - Do you have any concerns about potentially managing my money and bills and your own simultaneously? Managing someone else’s financial matters requires careful attention to detail and organization. It is essential to discuss any concerns potential attorneys-in-fact may have about managing both your financial affairs and their own simultaneously. This will help determine if they can effectively handle the responsibilities without any conflicts or difficulties.
- Do you have concerns about taking on any of the duties of agent? It is important to explore any concerns potential attorneys-in-fact may have about taking on these duties. This allows for an open discussion and ensures that they are fully aware of the responsibilities and potential challenges they may face, allowing them to make an informed decision
- Do you think you currently have time in your schedule to fulfill these responsibilities? Time management is crucial for fulfilling the responsibilities of an attorney-in-fact. It is essential to discuss with potential candidates whether they have the availability and capacity to devote the necessary time and attention to manage your personal or business affairs effectively.
- Do you have any questions about what your responsibilities would be? It is important to have open communication with potential attorneys-in-fact and address any questions or concerns they may have regarding their responsibilities. This ensures that they have a clear understanding of what is expected of them and can make an informed decision.
Consult Experienced Compassionate Arizona Attorneys
Our firm handles all types of estate, probate and fiduciary related disputes, including the foregoing and many other issues involving Arizona powers of attorney. If you or someone you know has a dispute over a will, trust, estate, probate or the granting or use of a power of attorney, email our firm. Our lawyers give sound advice and aggressive representation.
