A power of attorney or POA can enable you to engage in financial transactions when you can't be present to sign documents. It can also enable someone you trust to handle your finances should you become disabled or incapacitated.
Texas has separate power of attorney requirements for financial matters and for health care.
Power of attorney basics
A power of attorney is a legal document, whereby one person, called the "principal," gives another person, called the "agent" or the "attorney in fact," the authority to take certain actions on behalf of the principal. To understand powers of attorney, it will be helpful to know a few basic terms:
- General power of attorney. This gives the agent authority to act in a broad range of matters.
- Limited or special power of attorney. This gives the agent authority to act in a limited way, such as to engage in a specific transaction or for a limited period of time.
- Durable power of attorney. This continues in effect after the principal becomes mentally or physically disabled or incapacitated.
- Springing power of attorney. This gives authority to the agent only if and when the principal becomes disabled or incapacitated. By its very nature, a springing power of attorney is also a durable power of attorney.
- Medical power of attorney. This gives the agent the authority to make medical treatment decisions for you if you become mentally or physically unable to make your own decisions. By its very nature, a medical power of attorney is both durable and springing.
Uses for a POA
There are two primary reasons for having a financial power of attorney:
You need to engage is some type of financial activity but can't be present to do so. For example, you need to sign a deed to transfer title to property, but will be out of the country when that needs to be done. You can execute a power of attorney to allow someone else to sign the document on your behalf.
You wish to give someone you trust the authority to handle your financial matters in the event you become mentally or physically disabled or incapacitated.
Legal requirements for Texas power of attorney
Any adult may create a power of attorney in Texas. The document must include one of the following statements:
"This power of attorney is not affected by subsequent disability or incapacity of the principal." This makes it a durable power of attorney and gives the agent immediate authority.
"This power of attorney becomes effective on the disability or incapacity of the principal." This makes it a springing (and durable) POA, but the agent will not have authority unless the principal becomes disabled or incapacitated.
The POA must be dated and signed by the principal before a notary public or other person authorized in Texas or any other state to "take acknowledgments to deeds of conveyance" and administer oaths.
How to obtain the proper power of attorney form
Obtaining a power of attorney in Texas is fairly easy because the Texas legislature created a form titled Statutory Durable Power of Attorney. It may be found in the Texas Estates Code, at section 752.051. This form lists various types of powers, with a blank line before each power. To give your agent all of the listed powers, you can sign your initials on the line before the last item (making it a general POA). If you don't want to give your agent all of the powers, you need to sign your initials before each power you want your agent to have (making it a limited POA).
The Medical Power of Attorney Designation of Health Care Agent may be found in the Texas Health and Safety Code, at section 166.164. Using this form will assure compliance with Texas law.
By the using correct official form, and reading the instructions and information it contains, you can ensure you're in compliance with the legal requirements for a power of attorney in Texas. The form also explains the duties of the agent. When you use the official form, it is more likely to be recognized by those with whom your agent will be conducting business and can increase the likelihood it will be accepted.
Find out more about Estate Planning Basics