In Iowa, powers of attorney are important estate planning tools to make sure a person’s assets are cared for if they ever become unable to manage them. This article will discuss some important topics having to do with powers of attorney, including:
- What are powers of attorney?
- How does someone create a power of attorney?
- How is a power of attorney terminated?
- What are the agent’s duties?
- What if a conservator or guardian is appointed while there is a power of attorney?
What are powers of attorney?
The powers of attorney in this article are distinguished from durable powers of attorney for health care, mentioned in this article.
A power of attorney allows one person to act on the behalf of another. The person who grants authority to another in a power of attorney is called a “principal.” The person who acts on behalf of the principal is called the “agent.” The agent is usually an individual person, but could also be an agency, company, or other similar entity.
A person grants someone else power of attorney so that, in the event they are unable to make decisions regarding their property, finances, healthcare or other important decisions, there is someone else with the authority to act on their behalf.
How does someone create a power of attorney?
A power of attorney must be signed by the principal, or someone in the presence and at the direction of of the principle, other than the person intended to be the agent. A power of attorney must be signed before a notary, who also must be someone different from an agent. Powers of attorney created in other states are valid in Iowa, so long as the power of attorney was properly created in that state. The power of attorney is effective when executed (signed) unless the principal states (usually in writing) that it will become effective at a future date. It may also take effect upon some event happening. For instance, the power of attorney could say that it will take effect upon the principal becoming incapacitated, or upon the direction of a licensed physician.
The principal may give someone authority to decide whether an event triggering the power of attorney has happened. The principal should do this in writing. If there is not a person available willing or able to make this decision, a licensed physician or psychologist, judge, or other appropriate government official may determine the principal is incapacitated.
Multiple people may be co-agents. If this happens, the co-agents will make decisions based on majority vote, and may petition the court to decide issues if there is a disagreement, they aren’t able to solve. The principal may also appoint “successor” agents in case one or more of the agents dies.
An agent accepts its responsibilities by exercising authority, performing duties as an agent, or any other conduct indicating acceptance.
How is a power of attorney terminated?
The power of attorney terminates when the principal dies, cancels their power of attorney, the power of attorney provides when it should terminate, or the purpose of the power of attorney is specific and has been accomplished. Normally a power of attorney is “durable” meaning it continues even if the principal becomes incapacitated. If the power of attorney is not durable, it will also end upon the principal’s incapacitation.
An agent’s authority ends when
- the principal revokes that authority
- the agent dies, becomes incapacitated, or resigns,
- The agent is the principal’s spouse, and an action for dissolution for marriage is filed, unless the power of attorney says otherwise;
- The power of attorney terminates under its own terms
- The agent is named as having abused the principal in a founded dependent adult abuse report
- The agent is convicted of dependent adult abuse for having abused the principal.
The principal should immediately tell the agent if their authority is revoked. Otherwise, if the agent acts in good faith, and is unaware their agency has ended, the principal could be bound by the agent’s decisions.
What are the agent’s duties?
Apart from the specific duties listed in the power of attorney, the agent should act in accordance with the principle’s expectations (to the extent known) and otherwise in conformity with the principal’s best interests. The agent must act in good faith, meaning honestly with a sincere intention to act fairly on behalf of the principal, for the best interests of the principal, within the scope of the authority granted in the power of attorney.
Unless the power of attorney says otherwise, the agent that has accepted appointment must:
- Act loyally for the principal’s benefit (meaning, not put the agent’s interests, or the interests of anyone else, over the principal’s with regard to the principal’s property and financial interests)
- Not create conflicts of interests which would prevent the agent from acting in the principal’s best interests;
- Act with care, competence and diligence ordinarily exercised by agents in similar circumstances
- Cooperate with a person with authority to make health care decisions for the principal.
- Keep a record of all receipts, disbursements, and transactions made on behalf of the principal
- Attempt to preserve the principal’s estate plan, including preserving the value of its property, managing taxes, etc.
As long as the agent is acting in good faith, and for the principal’s benefit, the agent will normally not be liable in a criminal or civil case.
The agent may be given power to do things such as creating trusts, changing the principal’s estate plan, or other important decisions. However, the power of attorney must specifically give the agent that power. If there are specific duties a principal wants, or does not want the agent to undertake, it is important to specifically discuss them in the document creating the power of attorney. However, the principal may also grant an agent authority to do all acts a principle could do. An attorney will be able to assist you in creating a power of attorney appropriate given all of your assets and interests in property.
What if there are guardianship or conservatorship proceedings after the power of attorney is created?
After making a power of attorney, a principal may nominate a conservator to care for the principal’s property, or a guardianship to provide other care. Unless the court decides the principal’s pick is not in their best interests, the court should appoint the conservator or guardian nominated by the principal.
If a conservator is appointed for the principal, the power of attorney is normally suspended. However, the court or conservator may allow the power of attorney to continue. If this happens, the agent is accountable to the conservator and the principal. If the conservatorship ends, the power of attorney is reinstated.
.avif)
.svg){kind=small}
