6 Misconceptions About a Power of Attorney

By Rachel Ryan

If you had a television in the 2000s, you are familiar with the famous right-to-die legal case involving Terri Schiavo, her parents, and husband Michael Schiavo. After falling into an irreversible vegetative state, the question became, whether to pull the plug or keep her on life support. Without a Power of Attorney addressing medical, financial, and legal concerns, and no prescribed agent to act on her behalf, a tempestuous legal battle ensued for 15 years, until her feeding tube was finally removed. In order to better protect you and your family from future uncertainty and suffering, familiarize yourself with the 6 most common misconceptions surrounding a Power of Attorney.

What is a Power of Attorney?

A Power of Attorney (POA) is a written legal document defining a legally binding relationship, between a principal, who gives financial, medical, and legal authority to an agent, to make decisions on their behalf. A POA can be used while the principal is still legally competent, in situations where they feel certain affairs are better handled by an expert or third-party, or used when they are deemed legally incompetent, to avoid the costly and time-consuming process of obtaining a court-appointed guardian to carry out their wishes. It ensures peace of mind by allowing someone you trust to take charge of important decisions, preventing future confusion amongst family members and individual suffering.

Without a Power of Attorney, you risk leaving important financial, medical, and legal decisions to the courts and a court-appointed guardian or conservator who truly may not represent or know your best interests and wishes. A 2017 CNN Money article estimates the cost of obtaining a court appointed guardian to exceed $1,000. Excess financial costs, loss of control, embarrassment, loss of time, stress, and suffering can all be prevented with some proactive thinking.

Here Are 6 of the Most Common Misconceptions About a Power of Attorney:

Misconception 1: A POA Can Be Executed When the Principal is Legally Incompetent

The most common misconception about a Power of Attorney is that a principal doesn’t have to be legally competent to execute it. Not only do they need to be legally competent to execute a POA, a person needs to be legally competent to sign and execute ALL legal documents. Legal incompetence is defined as a person who is unable to manage their affairs due to a mental deficiency, such as psychosis, lack of I.Q., illness, or deterioration of the mind. Too often, families wait until a loved one is no longer legally competent and transitioning into care, leaving a court appointed guardianship as the only viable means to enforce wishes and directives. A court appointed guardianship can be a drawn-out, time-consuming process that is costly and taxing on one’s family.

Misconception 2: A Power of Attorney Gives an Agent Unrestrained Control of a Person’s Affairs

Once a POA is signed, and an agent inherits legal authority, it doesn’t mean they have unfettered discretion to do as they please. Although not explicitly stated in a Power of Attorney document, an implication by law arises preventing an agent from freely and carelessly deciding one’s financial, legal, and medical fate. All agents have an overriding, legal, fiduciary obligation, to act in the best interests of the principal. Should an agent’s decisions jeopardize the principal’s best interest, then they will be barred from acting on such, and may be subject to court review and removal. In order to prevent potential future abuse of a principal’s wishes, it is highly recommended to appoint an agent who is trustworthy, competent, and has integrity.

Misconception 3: It’s Only for the Elderly

Accidents and unexpected illness can happen at any age. Any person over 18 who wants to ensure their wishes are followed and loved ones are protected from financial hardship, confusion, or suffering, should create a Power of Attorney. For a comprehensive directive providing for medical, legal, and financial certainty, every adult should have both a Durable Power of Attorney and a Medical Power of Attorney.

Misconception 4: There is Only One Kind of Power of Attorney

There are actually two types of Power of Attorney; a General Power of Attorney, and a Limited or Special Power of Attorney. A General Power of Attorney outlines all powers covered by a Power of Attorney, including medical, financial, and legal decisions. Think of a GPOA as a blanket document covering everything a person would ever want taken care of while alive or incapacitated and unable to communicate. On the other hand, a Limited or Special Power of Attorney encompasses everything less than full power given to an agent. For example, a Special Power of Attorney could explicitly only grant an agent authority in situations of real-estate, finances, or business decisions, while leaving out authority in situations of legal and medical matters.

Misconception 5: It Can’t Be Created Orally

It is always recommended that legal documents and contracts are entered in writing and meet the Statute of Frauds. However, an oral POA may carry equal weight as one etched in writing, and hold up in court. Note that some jurisdictions may differ on this. You should also familiarize yourself with your state’s practices, and which institutions will and will not honor it. Some institutions, such as nursing homes, banks, hospitals, and the IRS, require a POA be in writing before they honor it.

Misconception 6: A Power of Attorney Survives Death

All Powers of Attorney terminate upon the death of the principal, and thus the agent’s authority also terminates. When drafting a POA, one should familiarize themselves with the differences between a Regular Power of Attorney and a Durable Power of Attorney. A Power of Attorney can be used when you want to appoint an expert to handle affairs you, even when you aren’t deemed legally incompetent. A Regular POA terminates upon incapacity or death of the principal, meaning an agent’s authority exists so long as the principal is alive, invalidated upon death or incapacity. A Durable Power of Attorney is as it name indicates, is durable through mental incapacity, allowing an agent to act on the principal’s behalf even when the agent is incapacitated or unable to communicate.

Familiarize yourself with these common misconceptions concerning a Power of Attorney document to spare yourself and family members from potentially distressing, confusing, and embarrassing future situations where they unsure of how to act and resolve your personal, legal, medical, and financial matters.

Image courtesy of Rachel Ryan

Rachel Ryan a legal writer for LegalTemplates.net. Rachel specializes in providing professional, diverse and creative articles, equipping individuals with the perfect tools for a variety of legal issues. When she’s not writing awe-inspiring content, she can be found trying to become the next Martha Stewart.