An “Agency” is a legal relationship that enables a person (the “Agent”) to act on the behalf of another (the “Principal”). Agency relationships are implied by law (such as a parent to a child, a husband to a wife, or a corporate officer with regard to his or her corporation) or are created by an express written legal document (a “Power of Attorney”).

The most common way to create a contractual type of agency relationship is by using a Power of Attorney. Basically, a Power of Attorney enables the agent to act generally or in various but limited ways for the principal (i.e. the maker of the power or “Grantor”). Some of the common types of Powers of Attorney are:

(1) The General Power. This document gives the Agent the power to engage in most (but not all) transactions for the Principal that the Principal could do themselves if they were present. This document is particularly helpful for married persons where one of the spouses may be away for lengthy periods of time. A unique form of General Power can be created that takes effect only on disability or incapacity. “Durable Powers” remain effective even after a Principal suffers a disability or incapacity. In Texas, a basic format for Powers of Attorney is provided by statute which is intended to be customized for specific needs.  It is important to understand however that such powers must be created before the onset of a disability or incapacity.

(2) The Special Power. This document enables the Agent to act only in specifically designated types of transactions for the Principal. Special Powers are used frequently in business, for buying or selling property (where one of the parties is not locally available), to provide for the temporary care and custody of children, to make withdrawals from accounts, pick up mail, transfer title to land, cars, boats, or other titled assets. Special Powers may also be “durable.”

(3) The Durable Power of Attorney for Health Care and Advanced Directive. This document enables the Agent to make health care decisions for the Principal, if the Principal is unable to do so due to unconsciousness, disability, or incapacity. This document is often executed along with a Directive to Physicians which is the Texas form for a “Living Will.” Again, statutory forms are provided as a starting point for Advance Directives and Medical Powers. After January 1, 2018, the new statutory form for Medical Powers is required in order to be effective; older forms are still valid until replaced or amended.

Legislative revisions now provide that General and Special Powers of Attorney must be honored in certain instances when presented to a person or entity and are in proper form. The person or entity presented with the Power of Attorney may require a Certification from the Agent. A form for such Certification is also provided by statute. To repeat, in order to be effective, Medical Powers must be in the form dictated by statute. 

All powers of attorney cease upon the death of the Principal. Unless the Power of Attorney is “durable,” it will cease upon disability or incapacity. Certain disclosures and affidavits are required in connection with the execution of effective Powers of Attorney. Your attorney can assist you in preparing and assuring that the instruments created will be binding and legally effective.

Unless a Power is Durable, it will cease to be valid upon the incapacity or disability of the principal. Powers always cease to be effective: when they expire of their own terms and upon the death of the principal. The conditions for revoking a Power should always be clearly stated in the body of the instrument.

A Power of Attorney can be an important device to your family or business. For more information about how a Power of Attorney can assist you, contact your lawyer for further information.

Notice: The foregoing article is intended for general educational purposes only and is not intended to provide specific advice or legal counseling with respect to any problem.