There are various types of powers of attorney. One distinction is between a general power of attorney and a special or limited power of attorney. Another distinction is whether the power of attorney is “durable” or not.

This FAQ covers the basics of power of attorney law and helps you understand some of the differences. Everyone has unique needs in estate planning, so it is important to understand the difference between these types of planning tools. That way, you can make sure you have the plan that is most appropriate for you by consulting with an attorney in your jurisdiction.

What Is a Power of Attorney in Minnesota?

Generally speaking, a power of attorney in Minnesota is a legal document that gives one person (the agent) the authority to act on behalf of another (the principal).  Most frequently, a power of attorney is created to handle legal, financial or medical needs.  For instance, a power of attorney can be used to manage bank accounts, pay bills, or manage financial portfolios and real estate investments.  A power of attorney can also be used in non-estate planning situations.  A power of attorney is clearly an important estate planning tool.  However, since there are several different types, used for different purposes, it is important to understand your options.

What Is the Difference Between a General and Special Power of Attorney?

The main difference between the two is the scope of authority the agent has over the principal’s affairs.  A general power of attorney gives broad power to the agent relating to certain categories of decisions, such as medical, legal, financial or business decisions. Executing a general power can be drafted so if something happens that prevents you from taking care of your own financial obligations, your agent, under the power of attorney, can take over.  This would allow your affairs to continue without worrying that problems may arise that you cannot handle.

A special or limited power of attorney provides only narrow choices the agent can make on behalf of the principal. For example, a limited power of attorney can be created for the specific purpose of allowing your spouse to make medical decisions for you if you cannot. Another example would be creating a power of attorney that allows a business partner to use specific assets for the benefit of your business if you become incapacitated.  Yet another example may involve a principal who owns rental property and needs an agent to handle all aspects of managing that property. The agent’s powers would most likely include collecting rent, negotiating terms with prospective tenants, or evicting tenants when necessary.  Once an agent completes the tasks required in a limited power of attorney, the powers are revoked and the legal document is no longer in effect.

The process for creating a limited power of attorney differs by state.  Minnesota’s laws can be found at MINN. STAT. ANN. 523.01 (2013), et seq.  In Minnesota, the agent is also known as the “attorney-in-fact.”

When Does a Power of Attorney in Minnesota End?

The answer depends on the type of power of attorney you have.  A power of attorney in Minnesota is a legal document that authorizes someone (the agent) to act on your behalf.  You can authorize your agent to do many things such as sign checks and tax returns, enter into contracts, buy or sell real estate, make financial or business decisions, or nearly anything else.  A power of attorney is sometimes tailored for a specific purpose, meaning that your agent cannot act outside that stated purpose.  A regular power of attorney ends under one of three conditions: when its purpose is fulfilled, when you become incapacitated or at your death.

A durable power of attorney, in contrast, remains effective even if you become incapacitated. If you executed a durable power of attorney, the powers will continue until your death unless you decide otherwise. It must end when you die, however, because it does not give your attorney-in-fact the authority to handle your affairs after your death.  Those issues are usually addressed by a will or living trust.

What Situations Will Terminate a Durable Power of Attorney?

There are a few situations that can affect when a durable power of attorney ends.  For example, a court can invalidate a power of attorney.  Although it is rare, a court can revoke the power of attorney if there is evidence that you were not mentally competent when it was signed or if you were under undue influence or defrauded into signing the instrument.  In some states, including Minnesota, a durable power of attorney automatically terminates when there is a divorce and the ex-spouse is the attorney-in-fact, which seems a reasonable consequence.

Why Would You Want to Revoke a Power of Attorney?

There can be many reasons that a power of attorney may need to be revoked.  For example, if the circumstances have changed and you no longer need someone to act on your behalf, you would probably decide the power of attorney is no longer necessary.  Also, if you no longer trust the person acting on your behalf or if you have found someone more suitable to act as your attorney-in-fact, you may decide to terminate the existing power of attorney and execute a new one.  Another common reason is that the purpose of the power of attorney has been fulfilled.

What Should I Do If I Want to Revoke My Power of Attorney?

If you choose to revoke your power of attorney, the revocation should be in writing and notarized.  The language of the revocation is simple.  It should include your name, the statement that you are of “sound mind,” and that you desire to revoke the existing power of attorney. The revocation can also provide the date of execution of the original power of attorney and identify the attorney-in-fact who was chosen.

Under Minnesota law, the revocation does not become effective until the attorney-in-fact receives notice. So, you cannot “secretly” revoke a power of attorney.  Also, it is a good practice to notify any financial institutions with which your attorney-in-fact may have done business on your behalf.

Should I Have a Minnesota Durable Power of Attorney?

A comprehensive estate plan should address contingencies that you may be confronted with while you are alive.  One of these is the possibility of becoming incapacitated and unable to handle your own financial and medical decision making.

Let’s say that you become incapacitated, and interested parties notice that you really can’t make sound decisions anymore. They can petition the court to appoint a conservator and/or guardian to act in your behalf. The problem with this is that you may not have chosen the same decision maker if the choice was up to you.

In fact, the choice is up to you as long as you act in advance while you are still in full control of your faculties. If you want to make sure that your own carefully selected decision makers are acting in your behalf if it becomes necessary, you can include durable powers of attorney in your estate plan.

You may wonder why these powers of attorney should be durable. The reason for this is because typical powers of attorney do not stay active if the principal individual becomes incapacitated. Durable powers of attorney do indeed remain in effect upon the incapacitation of the person who created the device.

Depending on where you reside, it can also be possible to create something called a springing durable power of attorney. A regular durable power of attorney will go into effect immediately upon its execution. A springing durable power of attorney will only become active if you do, in fact, become incapacitated.

As you go through your life, doctors may need answers to certain questions. To empower someone to answer these medical questions in your behalf, you could create a durable power of attorney for health care (i.e., a health care directive or advance directive).

You would also want to sign a HIPAA release authorization. There are laws that prevent physicians and hospitals from sharing the medical records of their patients. With this HIPAA release, you would allow doctors to open up your medical records to the health care agent that you name in your durable power of attorney and possibly others.

Health care decisions are not the only types of decisions that may become necessary. Someone is going to have to handle your financial affairs. If you have a revocable living trust in place you could name a successor or disability trustee. This individual or entity could step in to act as the trustee if you were to become incapacitated.

Short of this, you could execute a durable power of attorney for financial matters. You name an attorney-in-fact, and this agent will be empowered to make financial decisions in your behalf should incapacitation strike during the latter stages of your life.

Clearly, you’re going to want to name someone who has a good business acumen. You are not required to have the same person serve as both the health care agent and the financial decision maker.