3 Issues To Consider When Drafting Your Power Of Attorney

So you are now convinced that you need a Power of Attorney (POA) in place to help your family and loved ones take care of you in your time of need. Or maybe you and your aging parent have decided that a POA needs to be executed in anticipation of deteriorating health. Below are three items to consider prior to meeting with an attorney.

1. Avoid Joint Powers

   By executing a POA you are granting some other person or persons the power to handle your economic affairs. This includes everything from accessing your bank account to selling your house. The person or people you designate are your agents. My clients often tell me that they would like two people to serve as their agents. It seems that parents have a difficult time deciding between their son and daughter – they want to avoid hurt feelings. In reality, being the agent under someone’s POA is extremely hard and thankless work; the child not named should be pleased, not upset. Regardless of the emotional ramifications, joint agents should be avoided. The primary problem with joint agents is that they may not agree on what to do on your behalf. The POA is a document to make it easier for someone to take care of you. If the agents cannot agree, you may have actually made it more difficult for anyone to assist you in your time of need. Only one person should be given the ultimate decision making authority. This does not mean that you should not designate successor (back up) agents in case your primary agent is unavailable or unwilling to accept the responsibility. But at any one time, only one agent should have the power to act on your behalf.

2. Capacity to Execute

   You must have the “legal capacity” to execute a POA. Traditionally a Will begins with something like “I being of sound mind….” This statement is merely a recitation of the principle that in order to execute a Will, POA, or Advance Directive, you must understand the nature of the document and what it is that you are doing by signing it. In the case of an aging parent, the parent must have the capacity to execute the document. If the aging parent does not understand the nature of the POA or the ramifications of giving someone else power to act on their behalf, then the parent cannot legally sign a POA. As an attorney, if there is any question as to the capacity of the person retaining me to draft a POA, I will require a medical evaluation to confirm capacity.

3. Effectiveness

   When does your agent have the power you have given them? Does the agent have this power as soon as you sign the document? POAs are generally drafted one of two ways. Either the power is immediate or the power is triggered by your incapacity. If the power is triggered by incapacity, the POA will include provisions to determine capacity. For example, the POA may indicate that only if two doctors certify that you are incapacitated and unable to manage your affairs that the power comes into existence.

   An immediate grant of power makes the POA easier to use for your agent. Your agent can use the power without getting additional certifications from doctors in order to use it. If your agent is someone you completely trust (as it should be) then the immediate grant of power is recommended.

   A conditional power only upon incapacity can be more difficult to use. First, your agent has to actually obtain the doctor’s certifications. Second, there may be issues involved in interpreting the doctor’s certifications. For instance, a bank officer may not think the doctor described your condition in a way that indicates that you are incapacitated or that the date on the certification was too long ago to still be valid. This requirement for doctor’s certifications of incapacity creates an additional hurdle your agent must overcome in order to assist you in your time of need.

By David Galinis