Power of attorney is a powerful legal document that appoints someone to act on behalf of another person. In legal assistance cases, it is typically used when someone needs help managing their finances or making important personal and business decisions. It is especially common for the power of attorney documents to be drawn up as people age and pass on responsibility for their care to children or other family members.

Because the power of attorney grants so much power to the acting party (the agent), it is important that the decisions made about it be carefully made. You should grant power of attorney only to someone you trust completely with your major health and financial decisions.

We have compiled this list of the things you must know about the power of attorney before you take that major legal step. Read through this list and do your research carefully before making your final decision. Also, this article is meant to be informational, and should not be construed as legal advice.

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1. What Is Power of Attorney?

A Power of Attorney (POA) is a legally binding document. It gives you the power to appoint someone as the manager of your medical and financial affairs. This should be a major part of your estate planning. While most of us accept and plan for death as an inevitability, too many people do not think about what would happen if they became incapacitated while still alive.

If you are physically or mentally unable to make decisions for yourself regarding your care and financial situation, someone else will have to make those decisions for you. If you do not choose that person yourself, it falls to your next of kin. If you do not have next of kin, the state may end up making decisions on your behalf. This scenario is not ideal for most people, so seeking legal assistance is important.

2. There Are Different Levels of Power of Attorney

There are different levels of power of attorney that grant different levels of control. You can choose which decisions can be made for you and which cannot. You can also choose the trigger for power of attorney. Some documents (such as a durable power of attorney) take effect as soon as they are signed. However, others (such as a springing power of attorney) take effect only after a person becomes incapacitated.

While most people prefer a springing power of attorney, it is actually harder to use. The person you designate as your agent will have to prove that you are incapacitated to the bank and other entities. And sometimes, even if they have plenty of paperwork to back it up, the bank does not want to be responsible (that is, liable) for making that decision. And that means lawyers must get involved.

Seeking legal assistance can be daunting, but it is necessary. So, while there is no one perfect way to create a power of attorney, many attorneys will suggest you make a durable power of attorney. Then, leave it in trust with your lawyer until it needs to be passed on to your agent.

Talk to your attorney and potential POA agent about possible scenarios and your comfort level with certain decisions being made on your behalf. These can be uncomfortable conversations, but the clearer you make your wishes now, the less likely it is that there will be misunderstandings later on.

3. Choose Wisely

Someone who has power of attorney over you has access to your financial accounts and legal documents. This means they can access your accounts to pay your bills, pay for your care, and pay off debt on your behalf. But they also have access to your money for potentially more selfish purposes.

The agent of your POA has a fiduciary responsibility to use your funds for your direct benefit. This means they are legally required to care for you properly and not misuse the funds.

Technically, if your funds are found to be misused, you could sue the agent for stealing and/or misusing your money. However, if your money is already gone or if you are not aware enough to realize what is happening and seek legal aid, you are unlikely to recover what you have lost.

So, choose your power of attorney’s agent wisely.

4. You Can Choose More Than One Power of Attorney Agent

You can name two agents in your power of attorney if your state allows it. It can be a difficult legal process, but it can also provide accountability. Having two people in charge puts in place a system of checks and balances that ensures they are caring for you and your estate properly.

5. You Should Name an Alternate

Life is full of uncertainties. You never know what will happen after you have named an agent for your power of attorney. If your agent dies or becomes incapacitated while you are still alive, you will need someone to take their place. Make sure you name an alternate in your power of attorney.

6. Your Power of Attorney Dies With You

Some people do not fully understand the difference between a will and a power of attorney. A power of attorney grants control over your estate and life choices while you are alive only. Once you die, there is no power of attorney. For that reason, you must also have a will in place. Remember this when seeking legal assistance.

If you die with only a power of attorney, your agent will lose access and control of your estate and financial accounts. Make sure you have a will and specify an executor for the will. Many people make their POA agent and their executor the same person.

7. Read Your Power of Attorney

This may seem obvious, but—just as with any legal document—it is important to read and understand what you are signing. Carefully review all the powers listed and discuss each item with your attorney before you finalize the document.

For instance, you may trust your children implicitly, but do you want them to make changes to your revocable trust? Probably not. Do you have certain medical preferences, such as a do-not-resuscitate order or whether you receive water while in hospice? Make sure those wishes are honored regardless of the circumstances and wishes of your agent.

While it may seem petty, remember that setting up your estate and your wishes with as little wiggle room as possible is important. It relieves your children and loved ones from a huge burden. Make those decisions yourself, so that others do not have to wonder if they have correctly chosen for you.

Contact Area Agency on Aging of Western Arkansas for Legal Assistance Information

If you need legal aid and are not sure where to start, contact Area Agency on Aging of Western Arkansas. We do not provide legal counsel, but we are happy to connect you with trusted elder legal aid in your area.

We can also provide you with case management and set you up with any care you may need as you continue to age. Contact us with any questions at 479-783-4500.