6 Misconceptions About a Power of Attorney
Once a POA is signed, and an agent inherits legal authority, it doesn’t mean they have unfettered discretion to do as they please. Although not explicitly stated in a Power of Attorney document, an implication by law arises preventing an agent from freely and carelessly deciding one’s financial, legal, and medical fate. All agents have an overriding, legal, fiduciary obligation, to act in the best interests of the principal. Should an agent’s decisions jeopardize the principal’s best interest, then they will be barred from acting on such, and may be subject to court review and removal. In order to prevent potential future abuse of a principal’s wishes, it is highly recommended to appoint an agent who is trustworthy, competent, and has integrity.
Misconception 3: It’s Only for the Elderly
Accidents and unexpected illness can happen at any age. Any person over 18 who wants to ensure their wishes are followed and loved ones are protected from financial hardship, confusion, or suffering, should create a Power of Attorney. For a comprehensive directive providing for medical, legal, and financial certainty, every adult should have both a Durable Power of Attorney and a Medical Power of Attorney.
Misconception 4: There is Only One Kind of Power of Attorney
There are actually two types of Power of Attorney; a General Power of Attorney, and a Limited or Special Power of Attorney. A General Power of Attorney outlines all powers covered by a Power of Attorney, including medical, financial, and legal decisions. Think of a GPOA as a blanket document covering everything a person would ever want taken care of while alive or incapacitated and unable to communicate. On the other hand, a Limited or Special Power of Attorney encompasses everything less than full power given to an agent. For example, a Special Power of Attorney could explicitly only grant an agent authority in situations of real-estate, finances, or business decisions, while leaving out authority in situations of legal and medical matters.
Misconception 5: It Can’t Be Created Orally
It is always recommended that legal documents and contracts are entered in writing and meet the Statute of Frauds. However, an oral POA may carry equal weight as one etched in writing, and hold up in court. Note that some jurisdictions may differ on this. You should also familiarize yourself with your state’s practices, and which institutions will and will not honor it. Some institutions, such as nursing homes, banks, hospitals, and the IRS, require a POA be in writing before they honor it.
Misconception 6: A Power of Attorney Survives Death