Avoiding Common Power of Attorney Mistakes
Avoiding Power of Attorney Mistakes. A Power of Attorney (POA) is a valuable legal tool that grants someone else the authority to act on your behalf, making important decisions when you are unable to do so. While this document can be a significant asset in various situations, it’s essential to exercise caution and avoid some common mistakes that people often make with Power of Attorney. In this blog post, we’ll highlight these mistakes and provide insights on how to prevent them, ensuring you have a well-thought-out and effective Power of Attorney.
Power of Attorney Mistakes #1: Not Understanding The Different Types of Power of Attorney
One of the most prevalent errors is not fully comprehending the different types of Power of Attorney. As our prior blog post mentioned, there are General and Durable Power of Attorneys, each with distinct implications. General Power of Attorneys expire upon the principal’s incapacity, while Durable Power of Attorneys remain effective even in the event of incapacitation. Choosing the correct type of Power of Attorney is crucial based on your specific needs and circumstances.
Mistake #2: Appointing an Inappropriate Agent
Selecting an unsuitable agent is another common mistake. The agent holds significant responsibility and should be someone trustworthy, reliable, and capable of handling your affairs in your best interests. Avoid appointing someone solely out of obligation or emotional attachment without considering their ability to fulfill the role effectively.
Mistake #3: Failing to Set Clear Instructions and Limitations
A vague or poorly defined Power of Attorney can lead to misunderstandings and potential misuse. Clearly outline the scope of authority granted to your agent, specifying the tasks they are authorized to perform and any limitations you want to impose. Clarity is essential to avoid conflicts and ensure your wishes are upheld.
Power of Attorney Mistakes #4: Neglecting Regular Updates
Life circumstances change, and so may your preferences regarding the Power of Attorney. Failing to review and update the document periodically can lead to outdated or irrelevant instructions. Ensure your Power of Attorney accurately reflects your current wishes and personal circumstances.
Mistake #5: Not Informing the Agent and Other Relevant Parties
Once you create a Power of Attorney, it’s essential to communicate its existence to your chosen agent, family members, and relevant institutions, such as banks or medical facilities. Keeping everyone informed helps prevent potential disputes and ensures a smoother transition if the Power of Attorney needs to be activated.
Power of Attorney Mistakes #6: Thinking that a Power of Attorney Replaces a Will, Trust or Advance Care Directive
It is important to understand that a Power of Attorney is not a substitute for creating other Estate Planning documents such as a Will, a Trust or an Advance Care Directive. For instance, many people believe that a Power of Attorney will be able to take care of your Estate after death. Unfortunately, this is a common misconception. A Power of Attorney only remains valid until canceled, until a certain expiration date, or most importantly–only until the death of the principal. This means that a Power of Attorney cannot be used as a substitute for a Will or Trust.
Another common misconception is that a Power of Attorney can replace an Advanced Health Care Directive which appoints a health care proxy. Depending on the type of Power of Attorney and the authority granted, you may not have designated a person to handle medical decisions if you only have a Power of Attorney. That is why having both a Durable Power of Attorney and an Advance Health Care Directive is often beneficial.
A Power of Attorney is a powerful tool and a critical document to have as part of a complete Estate Plan. To understand options that can meet your individual needs feel free to contact our firm, Hartsfield & Egbert, PLLC at (405) 285-6858, or visit our website to send a message to schedule a consultation.