A power of attorney is a powerful legal document that allows one person the right to make decisions on behalf of someone else. A common apprehension associated with this process is the fear that the person granted the power, known as the agent or attorney-in-fact, will misuse it. While power of attorney abuses can happen, common protections prevent, or limit, damage that can be done.
Power of Attorney Basics
Powers of attorney, or POA, can be divided into various types based on several factors, such as the scope of the powers granted and the the time at which they take effect. For example, a limited POA restricts an agent to acting only in specific circumstances or under certain conditions. The POA can name an agent to act in your business interest, a separate agent to act for heath care decisions, as well as any other restriction you choose to make. A general POA, on the other hand, grants the attorney-in-fact the right to make any decision on behalf of the principal.
Types
State laws typically restrict attorneys-in-fact from taking specific actions. For example, in Maine, attorneys-in-fact cannot take the principal's money or property and transfer it to themselves unless the power of attorney specifically permits them to do so, according to Maine Legal Services for the Elderly. Further, state laws can also require that a POA either explicitly grant or revoke durability. Durability is the right of the agent to continue to make decisions even if the principal becomes incapacitated. Other protections can limit who can act as a power of attorney, such as preventing a hospital from acting as health care power of attorney.
Prevention
One of the most effective protections in any power of attorney begins before the document becomes effective. You can protect yourself from any abuses by taking the time to select a responsible, reliable attorney-in-fact. You can even use the power of attorney document to name alternate attorneys-in-fact, or divide responsibilities between multiple agents.
Misconceptions
Some people believe that an attorney-in-fact has the right to make decisions even after the principal has died, thus determining how property gets distributed after death. This is not true. An attorney-in-fact can only act as long as the principal is alive. Once dead, the principal's estate is governed by the terms of his last will and testament. The attorney-in-fact's powers cease as soon as they are revoked by the principal or upon the principal's death.
Warning
Power of attorney laws vary between states. These laws are often very complicated and make specific requirements. Always talk to an attorney before you try to use a power of attorney. The attorney can help you ensure that your interests are sufficiently protected from any misconduct by the attorney-in-fact.
