If you have been designated as someone’s attorney-in-fact under a power of attorney, it means you have been entrusted to make decisions on their behalf. Having power of attorney is not a responsibility that should be taken lightly, because not only is another person’s life and/or finances in your hands, but a wrong move could give rise to legal retaliation.
Whether you need assistance making difficult decisions or wish to confirm the decisions you are making are the right ones, Keystone’s power of attorney services can provide you with the support you need to ensure you are carrying out your duties diligently and ethically.
In the forthcoming sections, we will answer the above questions and more, as well as provide a detailed definition of power of attorney.
A power of attorney is a legally enforceable document that designates a trusted individual or organization to manage the affairs of the person who enacted the POA.
The person who executes the power of attorney document is referred to as the principal. The person granted power of attorney is referred to as the attorney-in-fact.
Not all attorneys-in-fact designated under a power of attorney are created equal. Some powers of attorney provide broad authority to the attorneys-in-fact, whereas others provide authority only in certain scenarios or for pre-designated periods of time.
POAs may also vary in terms of when they come into effect. Many are active as soon as they’re executed, and others don’t become active until the principal is declared mentally incompetent by their physician.
It is important to note that for a POA to be valid, it must be executed by the principal at a time when they are fully competent. If it is later proven that the principal was incompetent when they executed the POA, the POA could be invalidated by the court.
Powers of attorney tend to be enacted either for the sake of convenience or as a precautionary measure.
An example of when a POA might be convenient is if the principal has business interests across numerous states. By granting a trusted person power of attorney, the principal could have the POA sign contracts on their behalf when they are unable to be present.
If a principal is planning for their future, they may create a POA as a precautionary measure for if and when they become incapacitated. A POA may enable the attorney-in-fact, typically a trusted friend or family member, to make important personal and financial decisions for the principal when the principal is no longer mentally fit to make those decisions for themselves.
Having a POA in place can sometimes help eliminate the delays and tension brought on by family disagreements relating to decisions about their incapacitated loved one.
A medical power of attorney grants the attorney-in-fact the authority to make most health care decisions on behalf of the principal after the principal has been declared incompetent by their physicians. A financial power of attorney grants the attorney-in-fact the authority to make financial and legal decisions for the principal either after the document has been signed or if and when the principal becomes incapacitated.
Some common reasons for why powers of attorney are enacted include:
There is one particularly important distinction to keep in mind: a power of attorney must be enacted at a time when the principal is fully competent, whereas a conservator is appointed by the court to manage a person’s personal affairs and/or finances after they have become incapacitated and are unable to care for themselves.
If a person becomes incapacitated without having appointed a power of attorney, they might have no choice but to have a conservator of the person and/or a conservator of the estate appointed to them to manage their personal and/or financial affairs. Conversely, the creation of a POA prior to the principal’s incapacity may avoid the need for the appointment of a conservator in the future.
When a principal has designated an attorney-in-fact to manage their personal, medical, and financial decisions, there might not be a need for a conservator to be appointed if the principal becomes incapacitated. Where a valid POA is in place, the designated attorney-in-fact typically has the authority to act immediately.
Because conservatorships require court supervision, they can become burdensome for the court. In most instances, the court will be inclined not to grant one if existing POA documents can adequately protect the principal’s personal and financial interests.
Under certain circumstances, however, it may be appropriate for the court to appoint a conservator of the person, conservator of the estate or both, even though the principal has existing POA documents in effect.
Some of those circumstances include:
If you have been designated as the power of attorney for a principal, and someone is challenging your right to act through a conservatorship, it is recommended you consult with a power of attorney lawyer to protect and enforce your rights.
The roles of an attorney-in-fact and a trustee are separate and distinct. Trustees are charged with overseeing and managing the assets of a trust and typically do not have the authority to make personal decisions on behalf of the person who created the trust, called the settlor. Attorneys-in-fact, on the other hand, are charged with managing all or specified aspects of a principal’s personal life and medical decisions, and/or managing assets the principal owns outside of a trust.
Attorneys-in-fact may have standing to bring an action against a principal’s trust, if, for instance, they suspect the trustee to have misappropriated assets belonging to the principal. However, attorneys-in-fact do not have the authority to bring a trust dispute on behalf of the trust, since the trust is its own entity and POAs have no control over it.
Generally, an attorney-in-fact under power of attorney has no authority over a trust, and a trustee has no authority over assets outside the trust.
That being said, it is not uncommon for a principal to designate their attorney-in-fact to be the trustee of their trust, or for the settlor to designate the trustee of their trust as their power of attorney, since both POAs and trustees are in positions of confidence.
For example, if a person has plans to travel abroad for a few months, they may have their power of attorney take effect immediately and last only until they return. Conversely, someone who is planning for their future may elect to have their power of attorney take effect immediately and expire at the time of their death to make it as streamlined as possible for their attorney-in-fact to make decisions on their behalf should they ever become incapacitated.
A nondurable power of attorney takes effect immediately and ends at a specific time or if and when the principal becomes incapacitated.
A durable power of attorney remains in effect even if the principal eventually becomes incapacitated, and until the principal dies or revokes the document.
A springing power of attorney becomes effective after it is confirmed by a physician or another licensed medical professional that the principal is incapacitated and unable to make decisions for themselves.
Principals often opt for durable powers of attorney since these types of power of attorney can prevent delays in decision-making if the principal becomes incapacitated in the future.
While a springing power of attorney may seem more desirable on the surface, it can cause delays when a speedy decision needs to be made regarding the principal’s health care and/or finances. The attorney-in-fact will have to seek written confirmation of the principal’s incapacitation from their doctor or another medical practitioner prior to making any decisions on the principal’s behalf. This could take days or even weeks.
There are different types of powers of attorney available to meet different needs, and they are categorized by function. What your job will entail as the principal’s attorney-in-fact will be determined by the specific type of POA the principal has, as well as the specific terms of the POA document.
The types of powers of attorney available can be broken down into the following four categories.
A limited power of attorney is also referred to as a specific power of attorney and provides narrow authority to the attorney-in-fact to act in certain situations, e.g., to make a single real estate transaction or to be effective only for the few months a principal is traveling abroad.
General power of attorney is also referred to as financial power of attorney and provides broad authority to the attorney-in-fact to manage the financial and legal affairs of the principal. In general, the only decisions a financial power of attorney is not permitted to make on behalf of the principal are health care decisions. In many states, financial powers of attorney are durable by default (i.e., they remain in effect even if the principal later becomes incapacitated).
A health care power of attorney is also referred to as a medical power of attorney. A medical power of attorney entitles the attorney-in-fact to make health care decisions for the principal if the principal becomes incapable of making such decisions themselves due to incapacitation. By nature, a medical power of attorney is both springing and durable.
An advance health care directive (AHCD) provides the best of both worlds in that it allows a person to both appoint a medical power of attorney and provide instructions for health care (e.g., whether they want life support measures, whether they wish to receive palliative care or comfort care, whether they wish to be resuscitated) should they ever become incapacitated.
If you have been designated as one or more of the aforementioned POAs and are unclear about your role, you should not wait to get in touch with an experienced power of attorney lawyer who can provide you with the clarification you need to fulfill your duties competently.
As mentioned earlier, not all POAs are made equal. It is important to familiarize yourself with the POA document at hand before making any irreversible decisions. By doing this, you will safeguard yourself from having any claims brought against you for abusing your POA.
Here are some of the “dos” of being a general power of attorney:
Here are some of the “dos” of being a medical power of attorney:
Some power of attorney documents are thorough and list a specific set of responsibilities and rights for the attorney-in-fact. Some power of attorney documents, however, are not. If you are uncertain about any aspect of the POA or simply need help understanding what your role entails, it is crucial to enlist the assistance of a POA lawyer before getting started.
Here are some of the “don’ts” of being a general power of attorney:
Here are some of the “don’ts” of being a medical power of attorney:
Power of attorney abuse is a real problem. Many POAs take advantage of the authority they have been trusted with, which can have dire consequences for both the principal and POA if the principal or a family member of the principal decides to bring legal action against the POA. At the end of the day, you must remember that as someone’s power of attorney, you owe fiduciary duties to the principal, or, in other words, you must always act in their best interest.
Not all powers of attorney who have been accused of abuse intended to hurt the principal or their finances. Sometimes, they were making a decision they thought was right, but it turned out to be wrong. A surefire way to ensure you make the right decision every time is to hire a power of attorney lawyer to provide support along the way.
Attorneys-in-fact are usually entitled to a “reasonable compensation” for the time and effort they dedicate to carrying out their duties to the principal. The phrase “reasonable compensation,” however, is subjective, so how much a POA gets paid will depend on the compensation terms set forth by the POA document, if such terms exist. If the POA document expressly forbids the power of attorney from collecting compensation, it’s unlikely the POA will be able to collect one.
If the POA is entitled to a compensation, how much they can make will depend on who the power of attorney is. If it is a private professional fiduciary, they may require a more substantial compensation than if the power of attorney were an adult child of the principal.
Whether a power of attorney is permitted to sell property depends on three factors: 1) which state the power of attorney was enacted in, 2) what kind of property the POA is trying to sell (i.e., personal or real) and 3) the type of power of attorney that has been enacted.
Because of the complex nature of selling certain property under a POA and because laws vary by state, it is crucial to consult with a power of attorney lawyer to determine whether selling property is something you are permitted to do as a POA and whether the sale is wise and in the best interest of the principal.
Being someone’s attorney-in-fact is a huge job, and you cannot afford to evade any of your responsibilities since someone’s livelihood and life may be at stake. Perhaps you have young children and a demanding job, among a multitude of other duties, and being an attorney-in-fact is not a role you want to take on.
The good news is that, in California, you are generally not obligated to exercise the authority that has been granted to you via a POA document unless: (a) you have already entered into a transaction as attorney-in-fact for the principal, in which case you are obligated to complete the transaction, or (b) you have already expressly agreed in writing to act on behalf of the principal as an attorney-in-fact. Unless these limited exceptions apply, you can decline to act as an attorney-in-fact.
If a POA declines to act after the principal has become incapacitated and therefore cannot legally execute a new POA, and no alternate POAs agree to serve as attorney-in-fact, the only option may be to obtain a conservatorship for the principal. A conservator can be appointed by a loved one of the principal to manage their person and/or finances.
While a power of attorney’s responsibilities may not be as extensive as, say, a conservator’s, trustee’s or executor’s, there nevertheless exists ample room for missteps. Without properly understanding your rights and limitations as someone’s power of attorney, you are setting yourself up not just for failure, but for possible legal retaliation as well.
Keystone’s power of attorney lawyers are some of the best. With them in your corner, you can rest assured all the decisions you make on behalf of the principal will be sound, legal and ethical. Keystone’s power of attorney services serve as an excellent resource for attorneys-in-fact, regardless of the type of power of attorney they are.
If someone has appointed you to be their POA, you are probably wondering: Where do I begin? The first step is almost always parsing the POA document.
The thought of combing through a bunch of legalese can be anxiety-inducing, but this is where Keystone’s power of attorney lawyers come in. They can help you understand the terms of the POA and provide clarification about everything, from when the document will become effective (if it is not already) to what sorts of tasks will be your responsibility.
Keystone offers comprehensive power of attorney services that include:
Since POAs are fiduciaries, they must always act in the best interest of the principal. What does this mean in terms of legal disputes? Unfortunately, there is no hard and fast rule that dictates whether or not a POA should bring a dispute or participate in one. It really depends on the type of power of attorney that is in place, the nature of the dispute at hand, and whether the principal is incapacitated.
A power of attorney lawyer can help determine whether it is in the POA’s best interest to get involved in a legal dispute involving the principal.
Instances in which the POA should consider getting involved in a legal dispute include:
When POAs are managing the life and/or finances of an incapacitated principal, family members of the principal may bring claims of POA abuse if they disagree with the POA’s decisions or with the POA designation in general.
All this to say that just because a POA has been accused of abuse doesn’t mean that the POA necessarily did something wrong. Many times, the decisions a POA is forced to make are subjective with no right or wrong answer, but there are also times where POAs do act improperly and have legitimately committed negligence or abuse.
Whether you are a power of attorney who is being accused of POA abuse or suspect that another one of the principal’s POAs has committed abuse against the principal, your best route of action is getting in touch with a power of attorney lawyer right away. The sooner you act, the better. Keystone’s power of attorney lawyers will help you secure the best outcome possible for your case.
The most common power of attorney abuse claims are in relation to:
Financial powers of attorney or limited powers of attorney tasked with making transactions that are financial in nature are required to keep thorough accountings of every financial action they take on behalf of the principal. While a medical power of attorney is required to keep thorough records of the health care decisions they make for the principal, the accounting requirement applies primarily to financial powers of attorney or certain limited powers of attorney.
Thorough accountings must be kept not only because they are a legal requirement, but because they can help protect the POA should they ever be accused of mismanaging the principal’s assets. Attorneys-in-fact should try to be as detailed as possible when keeping records.
Some of the information that should be included in POA accountings includes:
Inaccurate accountings can result in legal disputes, so it is best for anyone appointed as an attorney-in-fact under a POA to seek help from a power of attorney lawyer to check accountings, prepare them on their behalf or defend them if they are ever challenged.
If a POA is suspected of committing abuse against a principal or negligently managing the principal’s person or finances, they are subject to suspension and/or removal by the court.
If a family member of an incapacitated principal suspects a power of attorney of having engaged in misconduct, they may try to have the POA removed and potentially surcharged, depending on the gravity of the alleged misconduct.
A power of attorney lawyer can help you navigate such a scenario to maintain your POA status if that is your desire and/or prevent you from incurring a surcharge. Likewise, if you are a family member of the principal who believes that a designated attorney-in-fact has acted improperly, a power of attorney lawyer can help you take action to see that the attorney-in-fact is suspended and/or removed.
If the principal is not incapacitated, they can revoke a POA at any time, and if they suspect you of misconduct, they, too, can bring a claim against you in court to recover damages.