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Common Myths About a Power of Attorney

A power of attorney allows a designated person (the “agent”) to make certain legal and financial decisions on behalf of another (the “principal”). It’s often enacted when someone becomes too ill to care for themselves, and their legal and financial affairs would be better served by having a more competent party take charge.

What a power of attorney does and does not do is often an area of much confusion. Below are common misconceptions & Myths about the scope of this legal document.

Myth #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. This is one of the most common misconceptions surrounding a power of attorney. So many times, we get a call from a client requesting a POA for an aging relative that was declared incompetent. An individual must be competent to execute legal documents.

Myth #2: 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. Many people fear getting a power of attorney because they are worried that their agent will mismanage their estate or 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 is critical that you choose someone you trust to be your agent. Try to choose someone who is trustworthy and has integrity.

Myth #3: You can find a power of attorney document on the internet. Yes, you can, but you should never get a power of attorney or any other legal document from the internet. A power of attorney should be created to represent the specifics of your unique circumstances appropriately. Getting a power of attorney document from the internet means that you could be paying for a document that:

  • Doesn’t 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 too ambiguous, you can open yourself up to challenges and interjections from interested parties. Most people wait to pursue a power of attorney

Myth #4: There is one standard power of attorney. The principal determines the type of powers to grant their agent in a power of attorney document, which is why it should be drafted by an experienced attorney so that it covers the principal’s unique situation.

A general power of attorney, which governs all powers covered by a power of attorney (like buying or selling a property or otherwise managing one’s assets), may exist. 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.

An Advanced Medical Directive (AMD) 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.

Myth #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, a 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? Click the link below for a consultation.

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