Power of Attorney in Iowa

A power of attorney is one of the least expensive and most useful documents in an estate plan, and one of the most abused. It lets one person act for another, which is exactly why it deserves care. In Iowa the document comes in several forms, and the difference between them decides whether it survives incapacity, whether it can be used to sign a deed, and how easily a bank will accept it.

What a power of attorney is, and is not

A power of attorney names an agent, sometimes called an attorney in fact, to act on the principal's behalf. It is a grant of authority, not a transfer of ownership. The agent can sign for the principal within the limits of the document, but the property still belongs to the principal and the agent owes the principal a fiduciary duty. A power of attorney is not a will. It ends at the principal's death, at which point the executor or the trustee takes over. It is also not a substitute for a trust, which can hold property in its own name.

The main types

A general power of attorney gives broad authority over financial matters. A limited power covers only what it names, such as selling one property or handling one account. A durable power of attorney stays effective if the principal becomes incapacitated, which is what most people want, because a non-durable power stops working exactly when it is needed. A springing power takes effect only when a stated event occurs, usually a doctor's determination of incapacity. Iowa has adopted a Uniform Power of Attorney Act, and the statutory form is durable by default. The document can be tailored, but the more unusual the terms, the more likely a bank will hesitate.

Health care powers are separate

A power of attorney for health care, often part of an advance directive, names who may make medical decisions and states the principal's wishes about treatment. A financial power of attorney does not authorize medical decisions, and a hospital will not treat it as one. Iowa also recognizes a declaration about life-sustaining treatment, which speaks to end-of-life care.

How it is signed and accepted

To be used for real estate and to be reliably accepted, an Iowa power of attorney should be signed and acknowledged before a notary. The statutory form includes a notice to the principal and a place for the notary. Without proper execution, a third party such as a bank or a title company may refuse to rely on it, and the refusal is often legal, not merely difficult. Even a valid document can be refused if the institution is unsure it is genuine. Give the bank a copy before it is needed, keep the original safe, and be ready to provide a current certification of the agent's authority.

The agent's duties

An agent must act in the principal's interest, within the authority granted, and keep records of what was done. The agent must not commingle the principal's money with their own, must not use the position for personal gain without clear authority, and must not make gifts unless the document permits it. A self-dealing agent can be removed by a court and made to repay what was taken. Those duties exist whether or not the agent is a family member. Being a son or daughter does not relax the standard.

When the agent can act, and what is off limits

A durable power is effective when signed unless it says otherwise. A springing power waits for its stated trigger, which should be described precisely, because a vague trigger invites disputes. The document should say what the agent may not do, such as change the principal's will or beneficiaries, and whether the agent may make gifts for tax planning. An agent should never change a beneficiary designation or a will, because those are the principal's decisions, not the agent's.

Revoking a power of attorney

A principal with capacity can revoke a power of attorney at any time by signing a revocation and giving written notice to the agent and to the institutions that relied on it. A new power of attorney usually revokes the old one if it says so. Getting the notice to the bank or brokerage matters, because a revoked agent who still holds an old copy can keep acting until the institution is told. If the principal has lost capacity, revocation is no longer possible, and the family's remedy is a court proceeding. That is why the choice of agent deserves real thought, and why a backup agent should be named.

What to do now

Decide who you trust to manage your money if you cannot, and name a backup. Decide who speaks for you about medical care. Have a lawyer licensed in Iowa prepare a durable financial power of attorney and an advance directive, sign them before a notary, and give copies to the people who will need them. The elder law section explains how these documents fit with guardianship, and the guide for families with elderly parents shows how to raise the subject with a parent.

A common failure to avoid

The most frequent failure is a power of attorney that exists but cannot be used. The document names an agent who has since died, or it was never notarized, or the bank was never given a copy, or it covers finances but the family needs a medical decision. Each of those is discovered at the worst possible moment. Review the document every few years, confirm the agent is still willing and able, and keep a current copy with the bank and the doctor so that the authority is ready before it is needed.

Iowa Legal Aid's public guides and the Consumer Financial Protection Bureau's materials on managing someone else's money are the sources here. This is not advice for your situation.