How can you sign documents at a real estate closing if it is inconvenient for you to be present due to a demanding business schedule? How can you pay your bills on time during recovery from a serious illness that leaves you debilitated and temporarily unable to manage your personal affairs? A power of attorney can be a useful tool to help you manage your property and facilitate business transactions when you are unable or unavailable to act. Through a power of attorney, you (the principal) can appoint another person (your agent) to act on your behalf.
Under the Illinois Power of Attorney Act, powers of attorney are durable, that is, they are effective until the principal’s death unless they are revoked or amended. This is a change from prior law when powers of attorney lasted only until the principal became disabled or incapacitated. Under current Illinois law, your wishes will be carried out despite your subsequent incapacity.
Powers of attorney may become effective on the date they are signed. If you wish, however, you can make the power of attorney effective at a future date, or when a certain event (such as medical disability) takes place. Under Illinois law, powers of attorney may be revoked or amended at any time and in any manner that communicates the desired change to your agent.
The Illinois Power of Attorney Act also protects third persons who rely on the power of attorney in good faith as long as the agent is acting within the scope of his or her power. Failure to communicate to a third party an amendment or revocation of the power will bind the principal to the agent’s actions notwithstanding commission of an unauthorized act. This protection for third parties also extends beyond the death of the principal if the agent or third person is unaware of the principal’s death.
The Illinois Power of Attorney Act includes a form for the power of attorney for property. This form gives the agent broad power to manage all of the principal’s real and personal property. However, you may not wish to give your agent such broad powers; you may limit authority by striking from an enumerated list any powers you do not wish your agent to have. The form also provides a section for you to include other appropriate limitations or any special instructions to your agent. For example, you may wish to give your son the authority to care for you and manage your estate during an illness, but deny authority to admit you to a nursing home. Or, you may wish to give your agent the authority to sign certain documents specified in the directive to refinance the mortgage on your home, but no authority to sell the property at a later point in time. In short, the form can be tailored to meet the principal’s individual needs.
The Illinois Power of Attorney Act also provides general guidelines for the agent’s actions. Under Illinois law, the agent does not have to exercise the power of attorney. But once the agent begins to act, he or she must use due care in following the instructions and wishes of the principal. An agent will be held responsible for losses due to misuse or negligent exercise of his or her authority but not for any loss due to an error in judgment. The agent also has a duty to keep good records and to be able to account for his or her actions. The agent will have access to and a right to copy your wills, trusts, and other personal papers or records, but he or she will not have the right to hold the originals. If the agent knows your estate plan, he or she must try to preserve it as much as possible.
The power of attorney is a convenient way for you to manage your property and business affairs when you cannot be present or if you are incapacitated or disabled. Although Illinois law does not require that a lawyer prepare the forms, in order to best protect interests, we invite you to call our offices if you wish to execute a power of attorney.