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As a part of comprehensive estate planning, you may be considering drafting a power of attorney (POA) but are wondering about the rights and limitations of your agent. This article will explain POA basics, including outlining the various types of POA you can name, the terminology you need to be familiar with, and some frequently asked questions.

A power of attorney is a legal document between two parties: the principal and the attorney-in-fact. The principal is the person granting someone else the ability to make legal decisions on their behalf. The attorney-in-fact, also known as the agent, has the authority to act on behalf of the principal.

Power of attorney arrangements are governed by state law, and each jurisdiction may have different rules regarding the enforceability of agreements, the scope of the agent's rights, and other factors.

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Because power of attorney laws can differ between states, you may want to have a local lawyer review your documents. The lawyer will have a better understanding of the Uniform Power of Attorney Act and whether it applies to your situation.

When setting out to draft a POA, you will need to be sure of its legality. To be enforceable, the document cannot grant excessive rights to the agent. Similarly, it cannot overly limit the agent's decision-making powers.

Basics of Power of Attorney

Typically, the agent can begin acting on your behalf once you sign a power of attorney agreement. If you decide you only want a POA to be valid in case of your incapacitation, you will draft what is known as a springing power of attorney. Likewise, if you want the agent to still maintain their rights and duties if you become incapacitated, you will need a durable power of attorney.

The scope of the agent's responsibilities is determined by the type of POA you sign, the details of the agreement, and the limits of state law.

Power of Attorney Rights by Types

Some people only want to grant a POA the ability to make medical decisions. On the other hand, some principals will only give financial powers to their agents. Determining the type of POA agreement you want will affect the rights of the agent.

Medical POA rights

Designating a medical POA grants the attorney-in-fact power to make health care decisions on your behalf. The agent's rights will range from choosing whether to perform surgery, what doctor or hospital treats you, and what medication you take.

Additionally, the agent can generally choose whether to have you placed in an assisted living or nursing home instead of having you treated in your home.

You can choose to have a medical POA only be effective once you have been incapacitated, though legal questions surrounding your cognitive abilities can be challenging to navigate.

Financial POA rights

Unlike a medical power of attorney, a financial POA generally has no control of the principal's health care. Instead, they can make monetary decisions like buying or selling assets, paying bills, managing investments, and filing taxes.

General POA rights

Depending on state law and what is included in your agreement, you can name a general power of attorney. This agent will have the ability to make both financial and medical decisions unless you specify what duties they do not maintain.

Because of the complex interplay between medical care and costs, it may be helpful to have a general POA instead of separate financial and health care agents.

Power of Attorney Limitations

All power of attorney agreements can be limited by choice. For example, as principal, you could include a clause that prevents your agent from selling your home or other designated property. However, generic POA documents grant an agent broad powers, subject to the limitations of state law.

Agent Limitations

All agents are fiduciaries of the principal. This is a legal concept that requires the agent to act in the principal's best interests. For example, an agent cannot transfer your entire bank account into their own personal funds. While some states prevent agents from advancing their own interests at all, the Uniform Power of Attorney Act disagrees. In states following the uniform law, agents can act to their own benefit so long as the actions also benefit the principal.

Additionally, agents cannot change the principal's last will and testament. Similarly, the agent cannot act on behalf of a deceased principal. Upon death, the principal's will kicks in. Whoever is named as executor then assumes their duty of disposing of and closing the deceased's estate.

Finally, the attorney-in-fact cannot name another agent or transfer the POA duties to another person without the principal's consent.

Read more: How to revoke a Power of Attorney


Get Your POA Now

Helpful Resources:
Springing POA - Cornell Law School
POA - Cornell Law School

Power of Attorney FAQs

  • Risks of giving someone a POA

    Your agent has broad powers and, unless you use a springing POA, can begin acting on your behalf the moment the document is signed. Make sure you fully trust the person you are appointing as your agent and that they have the skills and abilities to manage your finances and/or health care.

  • After giving a POA, can I make my own decisions?

    Yes. Both you and your agent can act on your behalf unless you are declared legally incapacitated. However, you are bound by your agent's choices even if you disagree with them. If your agent has overstepped or acted unwisely, your only recourse is to end the power of attorney arrangement.

  • Is it possible to name two agents?

    Yes. You can name two or more agents to act on your behalf or create a system where a second agent is granted duties if the first agent dies or becomes incapacitated. However, because of the powers granted to agents, beware of naming too many agents.

    Each agent has the right to act on your behalf, and resolving conflict between two or more attorneys-in-fact can be fraught. Imagine if you have two people differing over whether or not to sell an investment property. You may miss the best time to sell while their conflict plays out.

As a part of comprehensive estate planning, you may be considering drafting a power of attorney (POA) but are wondering about the rights and limitations of your agent. This article will explain POA basics, including outlining the various types of POA you can name, the terminology you need to be familiar with, and some frequently asked questions.

A power of attorney is a legal document between two parties: the principal and the attorney-in-fact. The principal is the person granting someone else the ability to make legal decisions on their behalf. The attorney-in-fact, also known as the agent, has the authority to act on behalf of the principal.

Power of attorney arrangements are governed by state law, and each jurisdiction may have different rules regarding the enforceability of agreements, the scope of the agent's rights, and other factors.

!

Because power of attorney laws can differ between states, you may want to have a local lawyer review your documents. The lawyer will have a better understanding of the Uniform Power of Attorney Act and whether it applies to your situation.

When setting out to draft a POA, you will need to be sure of its legality. To be enforceable, the document cannot grant excessive rights to the agent. Similarly, it cannot overly limit the agent's decision-making powers.

Basics of Power of Attorney

Typically, the agent can begin acting on your behalf once you sign a power of attorney agreement. If you decide you only want a POA to be valid in case of your incapacitation, you will draft what is known as a springing power of attorney. Likewise, if you want the agent to still maintain their rights and duties if you become incapacitated, you will need a durable power of attorney.

The scope of the agent's responsibilities is determined by the type of POA you sign, the details of the agreement, and the limits of state law.

Power of Attorney Rights by Types

Some people only want to grant a POA the ability to make medical decisions. On the other hand, some principals will only give financial powers to their agents. Determining the type of POA agreement you want will affect the rights of the agent.

Medical POA rights

Designating a medical POA grants the attorney-in-fact power to make health care decisions on your behalf. The agent's rights will range from choosing whether to perform surgery, what doctor or hospital treats you, and what medication you take.

Additionally, the agent can generally choose whether to have you placed in an assisted living or nursing home instead of having you treated in your home.

You can choose to have a medical POA only be effective once you have been incapacitated, though legal questions surrounding your cognitive abilities can be challenging to navigate.

Financial POA rights

Unlike a medical power of attorney, a financial POA generally has no control of the principal's health care. Instead, they can make monetary decisions like buying or selling assets, paying bills, managing investments, and filing taxes.

General POA rights

Depending on state law and what is included in your agreement, you can name a general power of attorney. This agent will have the ability to make both financial and medical decisions unless you specify what duties they do not maintain.

Because of the complex interplay between medical care and costs, it may be helpful to have a general POA instead of separate financial and health care agents.

Power of Attorney Limitations

All power of attorney agreements can be limited by choice. For example, as principal, you could include a clause that prevents your agent from selling your home or other designated property. However, generic POA documents grant an agent broad powers, subject to the limitations of state law.

Agent Limitations

All agents are fiduciaries of the principal. This is a legal concept that requires the agent to act in the principal's best interests. For example, an agent cannot transfer your entire bank account into their own personal funds. While some states prevent agents from advancing their own interests at all, the Uniform Power of Attorney Act disagrees. In states following the uniform law, agents can act to their own benefit so long as the actions also benefit the principal.

Additionally, agents cannot change the principal's last will and testament. Similarly, the agent cannot act on behalf of a deceased principal. Upon death, the principal's will kicks in. Whoever is named as executor then assumes their duty of disposing of and closing the deceased's estate.

Finally, the attorney-in-fact cannot name another agent or transfer the POA duties to another person without the principal's consent.

Read more: How to revoke a Power of Attorney


Get Your POA Now

Helpful Resources:
Springing POA - Cornell Law School
POA - Cornell Law School

Power of Attorney FAQs

  • Risks of giving someone a POA

    Your agent has broad powers and, unless you use a springing POA, can begin acting on your behalf the moment the document is signed. Make sure you fully trust the person you are appointing as your agent and that they have the skills and abilities to manage your finances and/or health care.

  • After giving a POA, can I make my own decisions?

    Yes. Both you and your agent can act on your behalf unless you are declared legally incapacitated. However, you are bound by your agent's choices even if you disagree with them. If your agent has overstepped or acted unwisely, your only recourse is to end the power of attorney arrangement.

  • Is it possible to name two agents?

    Yes. You can name two or more agents to act on your behalf or create a system where a second agent is granted duties if the first agent dies or becomes incapacitated. However, because of the powers granted to agents, beware of naming too many agents.

    Each agent has the right to act on your behalf, and resolving conflict between two or more attorneys-in-fact can be fraught. Imagine if you have two people differing over whether or not to sell an investment property. You may miss the best time to sell while their conflict plays out.