What is Power of Attorney?

A power of attorney (POA) is a legal document that allows someone to act on your behalf when you aren’t able to do so. While the name might indicate that the power applies to an attorney, this isn’t the case. Although you can give an attorney the authority to act on your behalf, that usually isn’t how people use a POA. More often, it lists a family member or a friend the person feels they can trust with their assets, medical care, or business transactions.

A POA is by no means a “fill in the blank” document that works for every person or in every situation. It is, however, a powerful document that you should consider carefully before signing. This is especially true for seniors who might develop health conditions that prevent them from living independently. Every person with adequate mental capacity should have the right to choose where they live.

Types of Power of Attorney

When you sign a POA, you become the principal. The person whom you designate to act on your behalf is the agent or attorney-in-fact. Your agent might have specific or broad powers over your financial, business, medical, and personal affairs, depending on the type of POA you sign.

General Power of Attorney

This type of POA gives your agent broad powers to handle all aspects of your finances. They can make business decisions, manage your money, purchase life insurance, make gifts, settle claims, and employ professional help. Sometimes people include a general power of attorney in their estate plan.

A person might use a general POA if they become ill, disabled, or travel out of the country. It might include a termination date specifying when the agent’s powers are no longer in effect.

Special Power of Attorney

A special power of attorney outlines which powers define the scope of the agent’s powers. If you can’t handle a certain transaction or prefer to have someone more qualified do it on your behalf, you can use a special power of attorney.

Some special POAs are very limited in their scope. For example, if someone is going to a horse sale in another state and you want them to make a purchase for you, you can use a special POA to give them permission to make the purchase on your behalf. They are limited to making that single purchase at that specific sale. Other reasons for having a special POA include managing a real estate sale, collecting debts, or handling business transactions. You can make the range of powers as broad or as narrow as you want.

Health Care Power of Attorney

Every day, people enter hospitals and nursing homes because of an age-related illness or injury. The reality is, many individuals don’t plan ahead for a time when this is necessary, which can make it challenging for family members to know what to do if you aren’t able to make decisions about your care. If you become ill, lose consciousness, are mentally incompetent, or can’t make medical decisions for any reason, your POA can make the decisions for you. In some states, you can combine parts of a health care POA and living will into an advanced health care directive.

Durable Power of Attorney

Often, people create a durable power of attorney before they need an agent. Sometimes they sign a durable POA at the same time they create their will, but it doesn’t go into effect until it is needed. It is durable in that it remains active throughout your lifetime. If you become mentally incompetent from an accident or an illness like dementia, a durable power of attorney allows someone you choose to step in and make decisions for you.

– What Is Mental Incompetence?

The legal definition of mental incompetence is – “the inability of a person to make or carry out important decisions regarding his or her affairs.” Further, mental incompetence is marked by manifestations of psychotic or unsound behaviors, either consistently or sporadically, by reason of mental defect. Some examples of conditions causing mental incompetence are dementia, retardation, and schizophrenia.

The biggest difference between a general and a durable POA is that the latter is good from the time you sign it for the rest of your life. There are a few exceptions to that rule including:

  • Your revoke it
  • In a few states, getting divorced automatically terminates the authority of an ex-spouse
  • The court invalidates your POA by determining that you were mentally incompetent at the time you signed it
  • The court determines you were a victim of fraud or undue influence at the time you signed it
  • The agent you named is either unavailable or no longer willing to serve as your agent

The durable power of attorney might give your agent broader powers than a general POA. A durable POA often combines the powers of a healthcare and general POA, allowing your agent to control every area of your life. Nothing is more important than choosing someone you can trust as your agent. Unfortunately, it isn’t unusual for agents to take advantage of their loved ones and family members. It’s easier to limit the powers to your agent than it is to predict what an agent will or won’t do.

People often don’t realize how frequently the powers of a durable POA get abused. Sometimes relationships or circumstances change between the period of time that you sign the POA and the time that the principal becomes ill. In many cases, the person the principal names as their agent doesn’t act within the duty of their obligation.

One way to protect yourself is by specifying in the document that it can’t go into effect until after a doctor certifies you as mentally incompetent. You might even go so far as to name one or more doctors who must agree on your mental state.

Like a healthcare POA, a durable POA allows someone to make your decisions for you. If you fail to specify under what conditions the POA goes into effect, you won’t need to be determined mentally incompetent for your agent to take control of every aspect of your life. That means that if you get injured or ill, the agent can make financial and medical decisions for you.

Your risk of getting an injury or illness increases with age. If you require medical care, your agent has the right to place you into a nursing home or other facility without your permission. The range of nursing homes, assisted care facilities, and retirement living facilities available today gives seniors more options for a better quality of life. Making the decision for you might prevent you from getting the level of care that’s right for you.

Advance Care Directives and Living Wills

An advanced directive provides oral and written instructions about your medical care in case you aren’t able to make your own decisions. This, too, differs among the states. Once you create an advanced directive, you have the right to change the contents whenever you wish. It’s important to keep your health care providers and your loved ones aware of your decisions. They need to know what you want in case you become seriously ill.

The person who has the authority to make decisions about your healthcare is a healthcare proxy, agent, or surrogate. Like a durable POW, the designation of a healthcare proxy remains in effect even after you become mentally incompetent. Advanced directives usually provide more specific guidelines about the types of decisions the healthcare proxy can make.

A living will is a type of advanced directive that reflects your choices about the medical treatment you receive at the end of your life instead of having another person make the decisions for you. For example, you might specify that you don’t want any life-sustaining measures taken that would only prolong your death.

assigning a power of attorney

Assigning Multiple Powers of Attorney

You aren’t limited to assigning only one POA agent, but you should specify whether you want them to act individually or together. Giving more than one agent the same powers which they must agree on jointly can lead to delays and controversies. It’s often more effective to have one agent responsible for your finances with another handling your medical decisions. If you name one agent on your durable POA, name a backup just in case. That prevents you from being left without an agent if anything happens to your first choice. You can include your choice as an alternative agent in the same POA document.

The Duties and Rights of a Power of Attorney

While an agent might have a broad range of powers under a POA, they also have a responsibility to the principal. As important as it is to choose an agent you can trust, people often fall short of their duty as a power of attorney. Your agent has a legal duty to act in your best interests. That means that every transaction, every decision, and every penny spent must be for your benefit. They can’t spend your money on themselves or for any other purpose. When they do, it’s considered POA abuse or fraud.

Penalties for Abusing Power of Attorney Rights

If the person acting as your agent knowingly abuses their powers of attorney, they might receive some penalties. It depends on the extent of the act and whether their actions constituted a crime. Some potential penalties include restitution, the cost of damages, payment for attorney’s fees and costs, and even criminal penalties. Abusing power of attorney privileges carries potential misdemeanor or criminal penalties.

How to Get a Power of Attorney

Carefully consider which type of power of attorney is right for your situation. Determine the best choice for your agent and talk to them about the responsibilities. Determine the range of powers you want to give your agent and consider dividing up your financial and medical powers between two people.

Talk with an attorney about your situation. Discuss the differences in advanced directives, living wills, and the different types of POA. Make sure you understand what each one entails. You can change your mind later on, unless something happens to you before you have the chance.

Learn more about your state’s requirements. Think twice before downloading an online form and creating a POA by filling in the blanks. It’s better to pay a little more and have a lawyer draft a document according to your specifications. A single legal term that you don’t understand could result in your giving your agent powers you don’t want them to have.

Many states don’t require you to file a copy of the power of attorney. Some states require you to file it with the clerk’s office if the POA involves real estate holdings. It’s a good idea to file it even if you aren’t required to.

Depending on your location, you might need witnesses, a notary, or both to make the document official. Your attorney will either take care of the arrangements or guide you on where to take the document. Some attorneys are notary publics, so they can notarize the document in their office.

Once you receive the power of attorney document, keep it in a safe place. The agent must show the document every time they act on your behalf.

Revoking the Power of Attorney

If you determine that the agent is not meeting their responsibility or you no longer require their services, you have the right to revoke it at any time. You can tear up the document and inform all parties that you revoked the document. You can also contact an attorney to create a formal revocation or replace the old POA with a new one. Again, there are online documents for revoking the power of attorney. If you use this option, make sure you follow the directions for your state.

Common Misconceptions About Signing a Power of Attorney

There are several misconceptions about what a person can and can’t do with a power of attorney. For example…

  1. You can sign a power of attorney even when you are mentally incompetent.

If you sign the document when you aren’t of sound mind, the court can revoke it. You can only sign if you are mentally competent at the time.

  1. An agent can do anything they want with your estate.

The agent has the legal duty, or fiduciary obligation, to act in the best interests of the principal. Using the principle’s assets for their own benefit is against the law.

  1. The agent can change the principal’s will.

All types of power of attorney end at death. The agent can never change the principal’s will.

  1. The agent can place the principle in a nursing home against their will.

No one has the right to decide where or how you live your life – during any stage of your life! The only time that another person has the right to make that decision for you is if you are no longer mentally competent. Even then, a judge might decide to give your legal guardian limited rights in making your decisions for you.

Now is the time to decide whether you need a power of attorney to protect you. It’s also a good time to choose where and how to enjoy your senior years.

Living in Luxury at Park Terrace

Park Terrace provides a range of care options amid a luxury lifestyle. Choose from independent living or assisted living options according to your needs. Enjoy the freedom and comfort of living in your home while receiving the level of care or assistance that you need.

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