The Top Misconceptions About a Power of Attorney
Get answers to some of the most frequently asked questions about a POA by learning from these misconceptions:
Misconception #1: You can sign a power of attorney if you are legally incompetent.
No! Someone can sign a power of attorney (or any legal document, for that matter) only if they are legally competent to do so.
According to Furman, this is one of the most common misconceptions about a power of attorney. “So many times I get a phone call from someone who says ‘I just got certification from my dad’s doctor to state that he is not competent so I can have you do a power of attorney and living trust for him,’” he says.
In fact, this misconception is so problematic that Furman wrote about it in detail in “The ElderCare Ready Book.” In Chapter 10, “Famous Last Words,” Furman writes:
“For some reason, people do not grasp the concept that one needs to be competent to execute legal documents. I understand that people generally look at what they need to get accomplished first; for example, accessing a bank account because dad is not able to anymore. However, at some point, they are told, informed or just believe that dad must have lost their legal capacity prior to the signing of a power of attorney or living trust. This is just backwards! Once Dad lacks legal capacity, then he can no longer sign any legal documents including a power of attorney or living trust, which was intended to be used if Dad became incompetent. The only recourse is then a conservatorship or guardianship proceeding through the court, which is a very costly and time-consuming process.”
Misconception #2: You can find a power of attorney document on the internet.
Yes, you can, but you should never get a power of attorney off the internet.
A power of attorney should be created to appropriately represent the specifics of your unique circumstances. “People should stay away from the internet and have a power of attorney custom drafted to your circumstances,” Furman advises.
Getting a power of attorney document from the internet means that you could be paying for a document that:
- Does not cover the legal requirements of your state
- Doesn’t represent the details that are appropriate to your situation
- Is not current
- Is too ambiguous
- Lacks important authorities
“If a power of attorney is ambiguous it is ripe for challenges and interjections,” Furman says. “The issue is that when problems with a power of attorney are discovered it is usually too late to do anything about it.”
Misconception #3: A power of attorney grants the agent the right to do what they please with your estate.
The agent under a power of attorney always has an overriding obligation, commonly known as a fiduciary obligation, to make decisions that are in the best interests of the principal (the person who named the agent under the power of attorney).
Just because a power of attorney grants the agent a power it doesn’t mean they have the right to act on that power. “Based on fiduciary obligations, just because it says you have the power doesn’t mean you have the right,” Furman explains. “The right to act is based on the fiduciary circumstances. If the action is not in the best interests of the principal then, notwithstanding that you have the power to act, you do not have the right to act,” he says.
“It’s important that people understand that this fiduciary obligation is not stated in the power of attorney, and it doesn’t need to be because it is implied by law,” Furman says. “The fiduciary obligation is an aggressive restriction placed on the agent under a power of attorney” to protect the principal.
In fact, a lot of people fear getting a power of attorney because they are worried that their agent will mismanage their estate and do what they please with it. Legally your agent shouldn’t do something that is not in your best interests — that is their fiduciary obligation to you as your agent.
However, it can’t be emphasized enough that it is critical that you choose someone you trust to be your agent. Try to choose someone who is trustworthy and has integrity, Furman advises. It’s also good if the person has the business savvy to understand the agent’s role and responsibilities but, in the end as long as they are trustworthy and act with integrity they can find the help and advice they may need within the legal world.
Misconception #4: There is one standard power of attorney.
The principal determines the type of powers to grant their agent in the power of attorney document, which is why it should be drafted by an experienced attorney so that it covers the principal’s unique situation.
With that being said, there are two main types of powers of attorney:
- A general power of attorney which governs all powers covered by a power of attorney (like buying or selling property or otherwise managing one’s assets). However, the specific language of a power granted will depend on the document. The powers in a power of attorney are specific especially when custom drafted (which they ideally should be). The agent needs to check the power of attorney document to see if the necessary powers have been granted.
- A limited or special power of attorney which refers to less than all powers. For example, a power of attorney could be drafted which only grants the power to conduct a real estate sale for the title of one property.
In California’s Probate Code there are exceptions to the rule about what powers a general power of attorney grants. Although this can vary by state: “In California if certain powers are not expressly written in the general power of attorney then they still don’t exist,” Furman explains. “For example, the power to gift, the power to create a trust on behalf of the principal, the power to disclaim a gift — if these powers are not expressly written in the general power of attorney then they don’t exist — even with a “catch-all” clause in the document, such as a phrase saying “all other powers are granted,” they don’t exist unless they are specifically written in,” he says.
A Health Care Advanced Directive (HCAD) allows an agent to make medical decisions for the principal. This document is meant to give guidance for the principal’s health care (about the principal’s wishes to remain on or off life support, for example).
A Physician’s Order Regarding Life-Sustaining Treatment (POLST) is not a power of attorney. This document is a directive for doctors and first responders who need to know the principal’s resuscitation wishes in an emergency situation.
Misconception #5: A durable power of attorney survives death.
All powers of attorney terminate on death. So it follows that once a person has passed away the authority granted to the agent under the power of attorney terminates.
The difference between a regular power of attorney and a durable power of attorney revolves around incapacity. Regular types of power of attorneys all terminate on death or incapacity — meaning that the agent can engage in legal business on behalf of the principal until the principal dies or is mentally incompetent to act on their own behalf. Once either of those events happens, the power of attorney is no longer valid. This general power of attorney might be useful if the principal is out of the country or otherwise indisposed.
A durable power of attorney, on the other hand, can survive mental incapacity (but not death). A durable power of attorney allows the agent to continue to act on the principal’s behalf even if the principal is mentally incompetent.
Do you have additional questions about a power of attorney? We’d like to hear your stories in the comments below.
Originally published at A Place for Mom