A power of attorney (POA) allows you (the principal) to designate someone—known as the agent or attorney-in-fact—to make decisions on your behalf should you be unavailable or determined mentally incapacitated. From healthcare to finances, a well-crafted POA provides peace of mind, knowing your affairs will be in trusted hands.
But what exactly can your appointed agent do, and what are the limitations? Let’s explore this further to make sure your POA covers precisely what you need it to.
Rights You Can Grant
Whether you grant your agent limited or broad powers, understanding what financial and medical matters you can legally authorize them to handle is crucial when creating your power of attorney.
Here are some areas you can authorize depending on the type of POA:
Medical Power of Attorney
- Medications. A medical POA can allow the agent to discuss, obtain, and choose prescription medications if you cannot decide.
- Medical Treatments. In addition, your agent can decide to pursue a particular medical treatment for you or to stop or refuse treatment.
- Hospital Admittance or Discharge. The agent may decide whether to admit you to the hospital or discharge you to receive care at home.
- Medical Record Access. The agent can obtain and sign off for you on whether or not to grant medical professionals or others access to your medical records.
- Organ Donation. Based on your wishes, your agent may authorize organ donations in the event of your death.
- Quality of Life Decisions. You and your agent should have a prior discussion on what situations you wish to be kept alive by machines or fed food and drink through a feeding tube. Your agent will carry out these decisions when dealing with medical staff if you cannot do so.
Living Will vs. MPOA
If you already have a living will in your estate plan, your appointed healthcare agent cannot make end-of-life medical care decisions contrary to the living will.
Financial Power of Attorney
- Everyday Living Expenses. Your agent can use your assets to handle day-to-day tasks, including paying bills and buying groceries.
- Benefits Management. If you have Social Security, Medicare, veteran’s benefits, or other government benefits, your agent may manage those benefits and decide how those benefits should be spent. They can also apply for benefits on your behalf.
- Business and Investment Decisions. Your agent can make business and investment decisions on your behalf.
- Transactions With the Bank or Lenders. Your agent may manage your bank accounts, sign checks for you, or handle any financial transactions with your financial institution.
- Taxes. Agents may handle tax matters, including filing tax returns and paying taxes, on behalf of the principal.
- Retirement Accounts. If you have any retirement savings accounts, you can authorize your agent to manage and determine how to use those assets.
- Property Management. Your agent can manage your real property (e.g., sell property, collect rent).
Other General Decisions
- Lawsuits. Your agent can file a lawsuit on your behalf or respond to a lawsuit on your behalf when needed.
- Legal Documents. Your agent can draft and sign necessary legal documents if you cannot be physically present.
- Life Insurance. Your appointed agent can also purchase life insurance policies on your behalf.
- Housing Needs. Your agent can make housing decisions for you, such as moving you into a care facility or a home with family.
Limitations on Your Agent
There are certain limitations on what an agent has authority to do under a power of attorney, such as:
Legal Limitation
- After-Death Affairs. Once the principal dies, the power of attorney is no longer valid. An agent has no legal authority to manage your estate after your death unless they are appointed administrator or executor of your last will. The power of attorney agent may petition the court to become the estate executor if you die without a will.
- Will Management. Even while you are alive, your POA agent is not authorized to change your will. They also cannot invalidate your will.
- Inheritances. Again, the power of attorney becomes null and void after your death. As such, your agent cannot distribute inheritances or assets unless they are the executor of your will or administrator of your estate.
- Transfer of Power of Attorney. Your agent cannot transfer the power of attorney to anyone else. An agent may decline the appointment but cannot grant authority to someone else. They can be held legally responsible if they attempt to do so.
Financial Limitations
- Personal Spending. Your agent may not use your assets to make unnecessary purchases for themselves. They are given the ability to access your financial assets and manage financial affairs on your behalf. Still, if it is proved that they use those assets for their benefit instead, the court may remove the power of attorney agent.
Medical Limitations
- Euthanasia. Your agent cannot authorize you to be euthanized.
- Medical Decisions While You Are Conscious and Of Sound Mind. The purpose of your power of attorney is to have an agent make decisions on your behalf when you cannot. However, you can still make those decisions if you are conscious and of sound mind.
Ethical and Moral Limitations
- Acting Against Fiduciary Duties. Your agent has a responsibility to act in your best interests. This, in law, is referred to as a fiduciary duty. If your agent actively acts against your interests or fails to act, they are in breach of their fiduciary duties. One example would be if your agent places you in a senior care home, learns that you are being abused in that home, and fails to remove you from the situation. In those cases, others (such as family members) may petition the court to remove you as an agent under the power of attorney due to a breach of fiduciary duties.
- Acting Against the Principal’s Previously Stated Decisions. Your power of attorney agent is meant to act on your behalf. Suppose you have previously filed a Do Not Resuscitate (DNR) form or have stated that you do not want to donate your organs. In that case, your agent is ethically bound to respect those decisions rather than making a different decision for you.
- Soundness of Mind and Body. The purpose of a POA agent is to act on your behalf and in your best interest when you are not of sound body or mind. Because of this, it’s crucial to appoint a trustworthy agent who will follow your wishes. If this ceases to be the case, the agent can be removed.
Power of Attorney Rights and Limitations: Comprehensive Chart
Conclusion
Understanding the power of attorney rights and limitations is crucial in creating a legally binding power of attorney document. Appointing a trustworthy agent as your power of attorney can offer peace of mind, ensuring your wishes are respected even when incapacitated.
However, to prevent misuse of authority, it’s essential to be aware of this legal arrangement’s limitations. Always consult a legal expert to navigate the complexities involved.
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