An Introduction to Powers of Attorney
A Power of Attorney (POA) is a legal document that grants one person the authority to make decisions on behalf of another individual. The person granting the authority is known as the principal, while the person receiving that authority is known as the agent or attorney-in-fact. In general, a POA gives the agent the authority to manage the financial, business, or legal affairs of the principal. A Power of Attorney can come into effect immediately when signed, or upon a future date or event stated in the document, such as upon incapacitation of the principal. In general , a POA can be as broad or limited in scope as the principal desires. For a healthcare POA, for instance, the principal may wish to grant decision-making authority for only a few specific procedures and/or treatments, or it can be granted for more general authority, such as making medical choices if the principal becomes incapacitated.
Having a POA in place can jumpstart the planning process for when a principal may no longer be able to fully care for themselves and, thereby, transfer the burden of decision-making to a trusted individual.
Iowa Power of Attorney Types
Durable Power of Attorney: A durable power of attorney provides the agent with the authority to conduct a variety of financial dealings on behalf of the principal, including but not limited to: comingling estate assets, real estate transactions and litigation over the estate.
General Power of Attorney: A general power of attorney, as the name implies, grants the agent comprehensive authority over the affairs of the principal, and permits the agent to do anything the principal could do for himself. It is a flexible alternative to having someone appointed as a court-appointed conservator who may make decisions about personal and financial matters. A general POA terminates upon the incapacity of the principal, after which a durable POA becomes effective or a court-appointed conservatorship is in place.
Limited Power of Attorney: A limited POA may be used when an agent needs specific authority for specific acts. It can be used when a principal is unable to act in a certain area but retains capacity in all other areas.
Medical Care POA: A medical care POA is an agent appointed by a principal to make medical treatment choices.
Iowa Power of Attorney Legal Requirements
When executing a power of attorney in Iowa, it is crucial to ensure that all legal requirements are met for the document to be deemed invalid. In Iowa, an individual must be at least 18 years old and have the legal capacity to grant the power of attorney. Additionally, the principal must be explicitly identified as having the legal authority to make the power of attorney, ensuring that they are not being coerced into signing the document.
Under Iowa law, both the principal and the agent (or attorney-in-fact) must be competent at the time of execution. The principal’s capacity is similar to that of a contract, which requires the party to comprehend the implications of the power they are exercising. The law does not stipulate that the principal must be mentally competent in order to execute a power of attorney. However, if a principal is labeled as mentally incompetent by the law, they are incapable of making decisions and would have no power to give to another person in a written document (thus making any such document invalid). Therefore, while a power of attorney can be executed during incapacity for legal purposes, it remains essential that, in the ordinary course of business, a principal must have the requisite mental capacity to comprehend the nature of the power that they are executing.
All persons executing a power of attorney must sign or formally mark the power of attorney. It is unnecessary for the power of attorney to be notarized, but it may be a good idea to do so. Since powers of attorney are executable by corporate agents, the following signatures must be considered: the signature of the principal; the signature of the "attorney" or agent; notary signature (not required); and two witnesses (not required).
The signature requirement for agents includes their own signature, a bar code, and possibly, the signature of the principal if there is an attestation clause. An attorney-in-fact must sign the power of attorney. Any of the following can sign the power of attorney for a corporation: a director, a member of the board of directors (if authorized by the board of directors), an officer, or a managing or general partner (if authorized by the members or partners).
Steps to Execute a Power of Attorney in Iowa
The creation process of an Iowa power of attorney involves several steps but the primary ones are document preparation, selection of an agent, and proper filing. The document itself must be directly applicable to the state of Iowa. This means that it must specifically state that it is a power of attorney in Iowa and it must be executed according to the laws of Iowa. A generic form, such as a power of attorney document applicable to all states, is not sufficient; you must be wary of boilerplate forms when you attempt to create a new power of attorney document for yourself.
Once you’ve prepared your document, you can then choose your agent. The agent must have the respective mental capacity necessary to carry out your wishes to the full extent. You should also select alternate agents to appoint if necessary and an agent who will step up to act in the event of your agent’s incapacity. As you do this, you should also look for someone who has strong business and property management skills. Be sure to review his or her budget and spending habits. Also ensure that your agent is someone you can trust to do what is right for you and to exercise good faith in carrying out your requirements. And finally, read the document out loud so that you can be sure that it contains the actions and terms that person will be able to carry out for you.
Powers and Limitations of Iowa POA Agent
The duties and responsibilities of the agent are crucial to keep in mind when selecting your POA. These responsibilities include the following:
- Duty of Care – Agents have a duty to act with due care, meaning they must make careful and judicious decisions.
- Duty of Loyalty – Agents are expected to act solely in the principal’s best interests and must be loyal to the principal.
- Duty of Segregation – Agents may not comment their funds or property to their own use, and must be prepared to account for all their actions as agents.
- Duty Not to Delegate – An agent may not delegate their responsibilities to others, or delegate them’s own responsibilities to other agents without the principal’s authorization.
Due to the expansive powers that may be granted to an agent, the law limits some of the powers of a POA agent, including the following:
1 . Cannot Give Away Principal’s Property – An agent cannot make gifts of the principal’s property without specific authority by the principal. Additionally, the agent cannot use the principal’s property for the benefit of anyone other than the principal, unless the agent has authority to do so.
- Cannot Change the Law of Domicile or Beneficiary Designations – An agent may not change the principal’s marital status, change his or her beneficiaries named in a will or revocable trust, or change principal’s state of residence without express authority to do so.
- Cannot Make or Revoke a Will – The agent may not make or revoke a will unless expressly authorized to do so.
- Cannot Create and Fund an Inter Vivos Trust – The agent may not create or fund an inter vivos trust without express authority to do so.
- Cannot Alter Agent’s Compensation – An agent may not alter the principal’s agent’s compensation unless specifically authorized to do so.
Iowa POA Revocation or Modification
Any Iowa Power of Attorney can be revoked or modified as long as the Principal is mentally competent. In this case, the Principal must revoke the existing POA in writing and then create a new POA. In the documents, they must name a new Attorney-in-Fact who holds the new Power of Attorney.
It may no longer be financially or logistically possible for an adult child to care for their elderly parents. Their current Power of Attorney may also not be up to date: the desired person may have died or become too ill to act as Attorney-in-Fact, or the Principal may have experienced a significant life event that requires an update to their POA.
If the Principal has become incompetent and is seeking to regain control over their affairs, the Power of Attorney can be revoked. This process is complicated and a Court Petition must be filed. A lawyer is required to revoke an existing Power of Attorney.
Several circumstances would warrant a change in Power of Attorney. If the Principal has moved, their POA needs to follow them. If the Principal has remarried or divorced, their former spouse will need to be removed from the document.
Common Errors and FAQs
As simple as it seems, a Power of Attorney (POA) can leave people feeling confused or lead them to make costly mistakes. Here are some common mistakes to avoid:
- Forgetting to have it notarized (even if not required by the state law).
- Failing to review the document with an attorney specializing in estate planning.
- Choosing an agent who is unreliable or untrustworthy.
- Not being sufficiently specific about what powers you want your agent to have.
- Focusing on generality rather than specificity.
- Not dating the document correctly or at all.
- Not specifying a successor agent, leaving you stranded if your agent becomes incapacitated or unavailable.
- Signing the POA but failing to have it witnessed or notarized when required.
- Not signing the right forms.
- Choosing an out-of-state agent.
- Trying to combine multiple types of POAs into one document.
Frequently Asked Questions:
1. Does an Iowa POA have to be filed with the court?
No. You normally only need to file a POA with the court if you’re taking legal action against someone who refuses to honor the provisions of a POA. For the most part, you present the POA to the agent, and they can act on your behalf unless you have made that POA to be active at a later date .
2. Can I have more than one agent under a POA?
Yes, you can choose more than one agent to act at the same time or you can name an alternate agent in case your first choice is unable or unwilling to fulfill the role.
3. What if the agent doesn’t want the responsibility of their role?
It would be wise to ask an agent ahead of time if he or she is willing to take on the role of agent before you appoint the person. Once appointed, that agent can decline or resign their role by signing a resignation form and/or giving notice to the principal. If there is no appointed successor agent, the court may need to appoint a replacement.
4. Should I give a copy of my POA to my agent?
Yes. It is very important for your agent to be clear on how you want this person to manage your property when you cannot. If your agent has a copy of your POA, he or she can refer to it for instructions and keep yourself from being taken advantage of.
5. What happens if I choose the wrong agent?
To that end, it’s smart to review your POA with an estate planning lawyer if you’re unsure. It is also good to have at least one successor agent in mind if your primary agent backs out or can no longer serve as your agent.