Durable Powers of Attorney,

Executing a Power of Attorney can solve or create problems.  It is important to know how they work and how dangerous they can be.

Most Estate Plans include a Power of Attorney.  They can be very useful to avoid a court appointed guardianship.  However, the person entrusted must be chosen carefully.

A Power-of-Attorney grants a third party the right to make decisions and enter into binding contracts on your behalf.

In Estate Planning signing a Power of Attorney is used to plan for incapacity.

There are reasons to execute a Power of Attorney when incapacity is not an issue.  These may include granting someone the power to execute a real estate contract or mortgage for a spouse who is away or deployed.  However, this article will primarily address using a Power of Attorney for potential events of incapacity.

What happens if someone becomes incapacitated and has no plans in place?

• If someone becomes incompetent without a Power of Attorney there is nobody legally authorized to handle affairs, sign checks and pay bills, transact any business or make health care and other personal care decisions.  The interested parties must go through cumbersome process to have person declared incompetent,and appoint a guardian.

• Standard Powers of Attorney often do not permit the person chosen to engage in advanced Medicaid or Veterans Benefits training.

Common Mistakes in Powers of Attorney

• Requiring Incompetence:  Many POAs contain a provision requiring one or more doctors to declare that a person has become incompetent.   This can be a bad idea for several reasons:
  • Doctors are extremely reluctant to make such determinations;
  • Doctors rarely have sufficient time make these evaluations;
  • Patients may be able to conceal issues; and
  • Examinations rarely reveal financial incompetence.
• Insufficient Forms:  The internet is ripe with POA forms that are not sufficient to meet contingencies that arise.  Typically these do not have sufficient permissions to enable an agent to make or change plans to benefit the principal who granted the powers.