Powers of attorney (POAs) are authorized by Arizona law. 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 specific (limited to a particular transaction or matter) or general. 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. 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.
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.
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 handle those and many other legal disputes involving powers of attorney in Arizona.
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.
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.
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.
Consult Experienced 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, call or email our firm. Our lawyers give sound advice and aggressive representation.