Power of Attorney Overview in Hawaii
A Power of Attorney is as simple as a document that authorizes an agent to act on your behalf. You can give another person broad authority, allowing him or her to do almost anything you could do, or limit your agent to making only specific decisions. The types of power of attorney recognized under Hawaiian state law include:
Each of these plays a pivotal role in ensuring smooth decision-making when you are no longer able to make sound choices for yourself. In many cases , a power of attorney is used to trigger the decision-making authority of your agent. Even in the case of a durable power of attorney, general legal capacity tends to be defined differently as a result of mental decline.
Some people are fine with a broad power of attorney even when they are still competent. Others prefer to issue them only as the need arises. In any event, choosing someone to handle your finances is of vital importance. Only those who are trustworthy and financially responsible should be trusted with your affairs.
Different Kinds of Power of Attorney Offered
In Hawaii, power of attorney requirements outline various types of authorization an individual can choose to grant to another person. These types include durable, medical and limited power of attorney.
The durable power of attorney is a designation that allows you to transfer your financial and property rights to the individual you appoint. Essentially, the person named has the power to handle your accounts, real estate and other business transactions. This form of power of attorney is "durable" because the authority granted doesn’t expire until you die or specifically revoke it.
The medical power of attorney is a legal document that allows you to transfer your healthcare rights to the person you choose. This is a relatively straightforward designation — the person who you choose will have complete control over your medical care, from selecting a doctor to initiating or terminating life-support measures. The medical power of attorney goes into effect only if you are incapacitated and no longer able to make decisions about your healthcare.
The limited power of attorney is used if there is a need to step in and handle a particular situation on your behalf, but you want the designation to be temporary or focused on a specific area. An example of this would be if you had a recent surgery and couldn’t manage your financial affairs for a few months. This type of power of attorney is effective only for as long as you specify on the documentation.
Creating a Power of Attorney Requirements
When creating a power of attorney in Hawaii, it is important to follow the state’s legal requirements to ensure that the document is valid and effective. First among these is the necessity for the form to be in writing. Verbal power of attorney declarations are not legally valid in Hawaii. The second requirement is the signature of the principal party. This is the person granting power of attorney to another individual (the named agent) to act on their behalf. All signatures must be voluntary. If, for whatever reason, a principal party cannot sign their name, they can authorize a third party to sign the form on their behalf. In any case, copies of the original document must be distributed to both the agent and the principal party. In addition to signatures from the grantor, the document must be signed by two witnesses. Furthermore, these witnesses do not have to be the same witnesses who may have been present at the execution of the original trust document, if the power of attorney was created as part of the trust. In other words, witnesses need only be present at the signing of the power of attorney. Neither one has to be the trustee or successor trustee of the trust. Neither do they have to be related to the principal party, although it is recommended. The next requirement is a signed and dated affidavit. This affidavit should specifically state that the person free from any overt influence, duress or coercion in creating the power of attorney. In addition, the developer of the power of attorney should not be related to the agent in any way. It is also essential that the witness used is independent of the principal party. Using a witness who has a significant financial interest in the power of attorney cancels out the validity of the document. Once this step has been completed, the creator of the power of attorney should have the document notarized. This represents the final step in the process of creating a legal power of attorney in Hawaii. If you have any additional questions about the requirements for creating a legal power of attorney, it is important to consult with a trusted Hawaiian estate planning attorney.
Essential Clauses for your Power of Attorney
To achieve the desired protection that comes with a power of attorney, it is critical that the document is drafted and executed with care. The following are key clauses that should be included in any power of attorney drafted for use in Hawaii. Again, given the complexity of these types of documents, and the potential ramifications of improperly worded or executed powers of attorney, it is strongly advised that anyone considering creating or obtaining a power of attorney consult with a competent attorney in Hawaii to ensure that the document not only meets the client’s needs, but also complies with all requirements set forth in Hawaii law.
The next section of any Hawaii power of attorney should contain the aforementioned statutory provisions concerning the statutory power of attorney requirement set forth in Hawaii as of January 1, 2014. These provisions should be clearly set forth in the power of attorney, so that it is clear to the principal (and any third parties who may be asked to accept the power of attorney) that the document has been created with full knowledge of the new statutory requirements under Hawaii law set forth above.
Haw. Rev. Stat. § 554F-405 – Powers granted in a statutory power of attorney. Generally, this statute authorizes the attorney in fact (the agent) to "do on behalf of the principal every act, power, duty, and authority that the principal could do if present or capable of acting." In addition to the general grant of power, this section provides the statutory power of attorney requirements in detail by specifically identifying several general powers that should be considered by the principal when drafting their power of attorney. The principal may clearly authorize the exercise of these powers by referencing them in their power of attorney document. In addition, the principal may "name other powers" which "if exercised, may give the agent the authority to perform similar acts as those specifically enumerated." Furthermore, a principal may provide specific limitations to the general power of attorney that they grant to their agent.
General Powers Granted to an Agent Under a Power of Attorney. These include powers concerning (a) real property; (b) tangible personal property; (c) stocks and bonds; (d) commodities and options; (e) banks and other financial institutions; (f) operating businesses or entities; (g) insurance and annuities; (h) estates, trusts and other benefits from third persons; (i) claims and litigation; (j) personal relationships and affairs; and (k) benefits from governmental programs or civil or military service. Section 554F-405(a)(1)-(11).
General Powers Granted in Representational Capacity. These include powers concerning (a) protect the principal’s estate from loss or diminution in value; (b) prosecute, defend, dispose of, or contest claims; (c) assert and prosecute claims for adjustment, expungement, or otherwise; (d) seek modification or termination of a conservatorship or trust or a declaration of rights, status, or other legal relations; (e) perform any other act necessary to achieve the principal’s intent; and (f) enter into negotiations with, or submit claims to, a governmental body for the benefit of the principal. Section 554F-405(b)(1)-(6).
The comments to Section 554F-405 state that the listing of powers to be granted under the power of attorney is not intended to be exhaustive, but rather provides a sample listing of common provisions granted by principals to their agents. In addition, the comments to the statute provide that the listing of powers should be considered in conjunction with the general grant of authority provision set forth above.
Amending or Revoking a Power of Attorney
In Hawaii, you have the legal right to revoke a power of attorney at any time if you no longer wish for your agent to have the authority to act on your behalf. Similarly, you can amend a power of attorney by submitting a new document to replace your prior one.
When you want to revoke your power of attorney, you must sign a new document expressly stating that your previous power of attorney is revoked. Although it technically does not need to be notarized or certified, it is always advisable to do so in order to fully protect yourself against future misuse. You can then provide copies of this revocation to your former agent , as well as your financial institutions and any other relevant people to whom the agent may have provided the old power of attorney.
Amending a power of attorney requires similar action on your part. You must execute a new power of attorney, either by signing a completely new document revoking the previous one or simply signing the new document (with an attached statement that the new document supersedes and revokes all previous powers of attorney). While the new power of attorney should explicitly state that it overrides all previous documents, simply stating that fact is not sufficient to automatically revoke a previous document. For that reason, you should also sign a document expressly revoking your previous power of attorney to ensure its validity.
Pitfalls and Mistakes to Avoid
One commonly seen mistake while creating a Power of Attorney in Hawaii is when people think they can just download a sample or fill in the blanks on a template and they are done. It is essential that you have an attorney review your Power of Attorney before signing it to make sure it meets your needs and is legally valid. We have worked with many clients who have paid thousands of dollars to financial or other institutions to have a Power of Attorney accepted only to find out later that it was not legally valid. Clients are sometimes told by those institutions that they accept Powers of Attorney, but upon further inquiry, clients learn later that their Power of Attorney was rejected. Unfortunately, by that time, the client’s condition has deteriorated such that they are no longer able to create a new Power of Attorney, putting a tremendous burden on their family members and friends to try to obtain guardianship.
Another equally costly mistake is when the Principal (the person who signs the Power of Attorney) fails to really think through the consequences that creating a Power of Attorney will have on their life. For example, we have seen Powers of Attorney which allow a third person to transfer ownership of the Principal’s house or sell their car during the Principal’s lifetime. This is particularly problematic if the Principal has a minor child. If the Power of Attorney is crafted in such a way, a third person could either give away the property to someone else or transfer it as a gift to themselves (which is why it is so important to select a good and reliable agent.) Also, if a third person sells Principal’s house before Principal becomes disabled and Medicaid eligible, Principal will not be eligible for Medicaid if long term care is needed because Medicaid looks back at any transfers or gifts of property in the five year period prior to the application for Medicaid.
FAQs on Power of Attorney
1. What does a durable power of attorney do?
A durable power of attorney grants someone you trust the authority to act on your behalf. Through this process, you are designating that person to make financial or legal decisions for you. The process will typically involve the use of a financial document/statement. Under Hawaii law, this will allow your appointed person to pay your bills on your behalf, manage your bank accounts, maintain your property and business affairs, etc.
2. Are there different types of powers of attorney in Hawaii?
Yes, there are generally three different types of power of attorney’s under Hawaii law:
(a) General Power of Attorney – under this general form, the person you appoint is granted authority to handle a wide array of general business matters on your behalf;
(b) Limited Power of Attorney – under this general form , the person you appoint is granted authority to handle specific business matters on your behalf; and
(c) Financial Power of Attorney – specifically related to granting a person authority to make financial decisions for you.
3. Who can be appointed as my agent in Hawaii?
Aside from your loved ones, you can appoint an individual (either a resident or non-resident of Hawaii) or a company licensed to operate in Hawaii to be your power of attorney. However, you typically want to ensure that the person you appoint understands your needs and will act in your best interest.
4. When is a power of attorney effective in Hawaii?
The effectiveness/duration of a power of attorney in Hawaii is dependent on what you put in the document. It is important to consult with your estate planning attorney on this, to make sure that it meets your needs.