While it is not always pleasant or easy to think about, the reality is that no one is immune from suffering an unexpected illness or serious accident. Planning ahead now can help ensure that you are able to maintain control of your own affairs, should you ever become unable to make or communicate decisions for yourself. One of the most important tools to have in your planning kit is what is known as a power of attorney.
A power of attorney (POA) is a legal document that allows you to appoint a person or an organization to make decisions and manage affairs on your behalf, in the event that you are no longer able to do so for yourself. The person who creates the power of attorney is known as the principal; the person they delegate is called the agent or attorney-in-fact.
There are different types of powers of attorney, which grant different levels of control over your affairs. Generally speaking, most people set up their power of attorney to be durable. A durable power of attorney goes into effect immediately and will remain in effect in the event that you become incapacitated.
Here in Illinois, there are two primary types of durable power of attorney to consider as you plan for the future: a power of attorney for property and a power of attorney for health care:
- Power of Attorney for Property: Also called a power of attorney for finances, this designates an agent, also known as an attorney-in-fact, to make decisions related to your finances and property on your behalf.
- Power of Attorney for Health Care: This document outlines the person or organization — known as the health care agent — who will make your medical and health care decisions if you should become incapacitated.
Let’s explore each of these important designations in more depth:
Power of Attorney for Property
The purpose of the power of attorney for property is to give the agent “broad powers” to handle the principal’s financial affairs, including the power to “pledge, sell, or dispose of” real or personal property. More specifically, under Illinois’ Statutory Short Form Power of Attorney Act, a power of attorney for property can be delegated responsibility to manage the principal’s:
- Real estate transactions. This includes buying, selling, exchanging, renting, and leasing real estate; collecting rent; assigning and accepting title to real estate; and paying or contesting real estate taxes and assessments.
- Financial institution transactions. This includes opening, closing, and controlling all financial accounts, including banks, trust companies, and credit units.
- Stock and bond transactions. An agent can be authorized to buy or sell securities, including stocks, bonds, and mutual funds, as well as to collect, hold and safekeep all dividends, interest, earnings, proceeds of sale, distributions, shares, certificates and other evidence of ownership paid or distributed with respect to securities.
- Tangible personal property transactions. This includes buying, selling, leasing, exchanging, collecting, and taking title to tangible personal property, as well as maintaining, restoring, moving, and safekeeping personal property.
- Safe deposit box transactions. An agent can be authorized to continue to have access to the principals’ safe deposit boxes; as well as to sign, renew, or terminate a safe deposit contract.
- Insurance and annuity transactions. This includes dealing with any type of insurance or annuity contract, including life, accident, and property insurance. This might include paying premiums or collecting distributions.
- Retirement plan transactions. An agent can be authorized to contribute to or withdraw from a retirement plan, including pension and employee savings plans.
- Social Security, employment and military service benefits. An agent can be authorized to prepare, sign, and file any claim or application for Social Security, unemployment or military service benefits; and control, deposit, collect, receive, and take title to and hold all benefits under Social Security, unemployment, military service or any other state, federal, local, or foreign statute or regulation.
- Tax matters. This includes signing, verifying, filing, and paying the principal’s federal, state and local income, gift, estate, property, and other tax returns, including joint returns and declarations of estimated tax.
- Claims and litigation. An agent is authorized to institute, prosecute, defend, abandon, compromise, arbitrate, settle, and dispose of any claim in favor of or against the principal or any property interests of the principal, and collect for any claim or settlement proceeds and waive or release all rights of the principal. Importantly, an agent is authorized to employ attorneys and others as necessary in connection with litigation; however, a power of attorney does not authorize an agent to appear in court as an attorney-at-law or otherwise to engage in the practice of law unless he or she is a licensed attorney who is authorized to practice law in Illinois.
- Commodity and option transactions. This includes buying, selling, exchanging, assigning, conveying, settling, and exercising commodities futures contracts, and collecting for all proceeds of any such transactions.
- Business operations. This includes organizing or continuing any business, including the ability to operate, buy, sell, expand, contract, terminate, or liquidate any business.
- Borrowing transactions. An agent can be authorized to borrow money; mortgage or pledge any real estate or tangible or intangible personal property as security for such purposes; and sign, renew, extend, pay and satisfy any notes or other forms of obligation.
- Estate transactions. This includes accepting, exercising, releasing, rejecting, renouncing, assigning, suing for, or claiming any legacy, bequest, devise, gift or other property interest or payment due or payable to or for the principal; asserting any interest in and exercise any power over any trust, estate or property subject to fiduciary control; or establishing a revocable trust solely for the benefit of the principal that terminates at the death of the principal. However, an agent may not make or change a will and may not revoke or amend a trust revocable or amendable by the principal unless specific authority to that end is given.
At the time that they create the power of attorney document, the agent can exclude, modify, or limit any or all of the powers listed above. They may also add other delegable powers, including the power to make gifts.
Agents are expected to hold themselves to a high standard of conduct, including:
- doing what they know the principal reasonably expects them to do with the principal’s property;
- acting in good faith for the best interest of the principal, using due care, competence, and diligence;
- keeping a complete and detailed record of all receipts, disbursements, and significant actions conducted for the principal;
- attempting to preserve the principal’s estate plan, as consistent with the principal’s best interest; and
- cooperating with a person who has authority to make health care decisions for the principal
As an agent you must not act so as to create a conflict of interest; take any action beyond what is granted by the power of attorney; commingle the principal’s funds with your own; borrow funds from the principal unless otherwise authorized; or continue acting on behalf of the principal if the power of attorney is terminated or your authority is removed.
Agents typically have the authority to employ other people as needed to properly exercise their powers, such as financial advisors and attorneys. Agents are also entitled to reasonable compensation for services rendered.
Power of Attorney Health Care
Illinois law was created to recognize:
the right of the individual to control all aspects of his or her personal care and medical treatment, including the right to decline medical treatment or to direct that it be withdrawn, even if death ensues.
This includes having the ability to make decisions and control treatment even if the individual “becomes a person with a disability.” A health care power of attorney can allow the principal to delegate their decision making power to a trusted agent.
Under Illinois’ Power of Attorney Act a principal may delegate a wide variety of health care powers to an agent, including, without limitation:
all powers an individual may have to be informed about and to consent to or refuse or withdraw any type of health care for the individual and all powers a parent may have to control or consent to health care for a minor child.
If there is ever a period of time when a physician determines that an individual cannot make their own health care decisions, or if they do not want to make they own decisions, some of the decisions an agent can be empowered to make are to:
- talk with physicians and other health care providers about the principal’s condition
- see medical records and approve who else can see them
- give permission for medical tests, medicines, surgery, or other treatments for mental and physical conditions
- choose where the principal will receive care, and which physicians and others will provide it
- decide to accept, withdraw, or decline treatments designed to keep the principal alive if they are near death or not likely to recover. The principal may choose to include guidelines and/or restrictions to limit their agent’s authority in these matters.
- agree or decline to donate the principal’s organs or body, if they have not already made this decision for themselves
- decide what to do with the principal’s remains after death, if they have not already made plans
A health care agency may extend beyond the principal’s death if necessary to permit anatomical gift, autopsy, disposition of remains, or access to medical records.
As with a power of attorney for property, the principal can put specific limits on the agent’s decision-making authority. The health care agent is required to use due care to act for the benefit of the principal.
A health care agent is generally authorized to contract for any and all types of health care services and facilities in the name of and on behalf of the principal, and to bind the principal to pay for all such services and facilities. However, the agent shall not be personally liable for any services or care contracted for on behalf of the principal.
Interested In Learning More About Powers of Attorney In Illinois? We’re Here for You
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