What is a Power of Attorney?
Quite possibly the most important legal document you may ever execute is a Power of Attorney (POA). This document is prepared for an individual called the “principal” and names another person or entity as an “agent” or “attorney in fact” to act on his or her behalf, often due to sudden or gradual incapacity.
The agent becomes what is known as a fiduciary, stemming from the Latin word “fiducia”, which literally means trust. A fiduciary is held to the highest standard of care, placing the principal’s interests before his or her own. It is extremely important that the person or entity appointed as agent is trustworthy because a POA conveys great authority to the agent.
POA documents are created by statute and provide authority to the agent to perform a variety of duties on behalf of the principal. This document can also be used for a specific purpose such as the sale of a vehicle, a real estate transaction, or for a matter more complex such as financial and healthcare needs.
It is wise to name at least one successor or back-up agent in your POA in the event that the first named individual is unable or unwilling to serve. The agent could be an individual or an entity such as your local bank. However, naming more than one individual or entity to serve as your POA jointly can be problematic and may even be unacceptable to some institutions.
The laws pertaining to a Power of Attorney change periodically including those related to signing, witnessing and notarizing the POA document. Updates in recent years also include the need for specific language regarding making gifts, the right to make changes to beneficiary information, the right to alter right of survivorship options, and others.
One consistent fact that never changes is that a POA ceases immediately upon the death of the principal. No further action of any kind is permissible until an executor or administrator of the estate is appointed following probate of the last will and testament.
As with any legal document, an attorney should be consulted for advice specific to your needs and expectations for the Power of Attorney relationship. Like other financial institutions with trust powers, ACNB Bank often serves as POA for individuals in our community and maintains the specialized skills necessary for estate settlement and trust administration as the needs arise.
Christine R. Settle is Vice President/Trust Officer for ACNB Bank.