Powers of Attorney – Only as Powerful as You Make Them
How Powerful is Your Power of Attorney?
At our firm, we believe the Durable Power of Attorney is the most important document a person can have. When it comes to planning for your future, protecting your assets, and navigating potential long-term care needs, your Power of Attorney can either be your greatest tool or your biggest roadblock. The problem is that most people don’t know what their document actually authorizes.
What is a Power of Attorney?
A Power of Attorney (POA) is a written document in which you (the “principal”) appoint a trusted person to act as your agent on your behalf. This document confers legal authority on your agent to perform certain acts, like signing your name to financial documents or paying your bills. However, the powers you grant are strictly limited to what is specifically written in the document.
The “Short-Form” Trap
Many people have what is known as a “short-form” or statutory Power of Attorney. This is a generic, often 2-3 page document where you simply initial next to a list of powers. What most people don’t realize is that these powers are often severely limited by the state statutes they reference. A simple initial next to “real estate transactions,” for example, may not grant your agent the specific authority needed to sell your home to pay for care or to transfer it into a trust for asset protection.
Can My Agent Appoint Someone Else?
A common question we hear is, “If I am my dad’s agent and I’m leaving the country, can I appoint my sibling to act in my place?” The answer, in almost all cases, is no. The authority granted in a POA is personal to the agent you named. An agent cannot delegate their authority to someone else unless the document contains a specific provision that explicitly allows them to do so—a feature rarely found in generic forms.
The High Cost of an Inadequate POA
An inadequate Power of Attorney becomes a major problem when a family is facing a crisis. Without the specific, robust powers needed for elder law and asset protection, your family’s hands may be tied. This can prevent them from taking the legal steps necessary to protect your assets from the high cost of long-term care, often forcing them into a public and expensive guardianship proceeding to gain the authority they need.
A Power of Attorney is only as powerful as you make it. It is a critical component of any comprehensive plan to protect your assets and is essential when planning for long-term care benefits. Call our office at (919) 256-7000 to schedule a consultation.