Whether you’ve been named as someone else’s power of attorney (POA) or you’re looking to appoint one for yourself, know what rights, responsibilities, and limitations come with this legal designation.
What is power of attorney?
Like most legal undertakings, setting up and using power of attorney documents can be a confusing process. Yet, these essential tools enable aging adults and their families to create a solid plan for addressing future care needs and offer invaluable peace of mind.
POA documents allow a person (referred to as the principal) to decide in advance whom they trust and want to act on their behalf should they become incapable of making decisions for themselves. The person who is appointed to act on behalf of the principal is called the agent.
From there, it’s important to distinguish between the two main types of POA: medical and financial.
A medical POA (also known as a health care POA) gives an agent the ability to make decisions about care the principal receives if they are incapacitated. A financial POA gives an agent the ability to make financial decisions on behalf of the principal. It’s common to appoint one person to act as an agent for both financial and health care decisions, but in some cases it may be wise to separate the two.
Power of attorney rights and limitations
The powers of an appointed agent can be broad or narrow, depending on how the POA document is written. Here are a few examples of the kinds of decisions a principal can allow their agent to make with each type of POA.
What can a medical power of attorney do?
An agent with a valid power of attorney for health care may be able to:
- Decide what medical care the principal receives, including hospital care, surgery, psychiatric treatment, home health care, etc. (These choices are dependent upon the financial means of the principal and the approval of their financial agent.)
- Choose which doctors and care providers the principal uses.
- Determine where the principal lives. This includes decisions regarding residential long-term care, such as assisted living, memory care, and nursing homes. Again, the principal must be able to afford their living arrangements and the financial POA must approve these costs.
- Dictate what the principal eats.
- Choose who bathes the principal.
What can a financial power of attorney do?
An agent with a valid power of attorney for finances may be able to:
- Access the principal’s financial accounts to pay for health care, housing needs, and other bills.
- File taxes on behalf of the principal.
- Make investment decisions on behalf of the principal.
- Collect the principal’s debts.
- Manage the principal’s property.
- Apply for public benefits for the principal, such as Medicaid, veterans benefits, etc.
What a power of attorney can’t do
A generic POA document that doesn’t contain any limitations typically gives an agent broad power over medical or financial decisions. However, there are still a few things that an agent cannot do. One of the fundamental rules governing an agent’s power is that they’re expected to act in their principal’s best interests.
An agent with power of attorney can’t:
- Change a principal’s will.
- Break their fiduciary duty to act in the principal’s best interests.
- Make decisions on behalf of the principal after their death. (POA ends with the death of the principal. However, the agent may also be named as the executor of the principal’s will, or the agent may petition to become administrator of their estate if the principal dies without a will.)
- Change or transfer POA to someone else. (An agent has the right to decline their appointment at any time. Unless the principal named a co-agent or alternate agent in the same POA document, or is still competent to appoint someone else to act on their behalf, an agent can’t choose who takes over their duties.)
The Uniform Power of Attorney Act
Each state has statutes that govern how power of attorney documents are written and interpreted. This can complicate matters when a principal decides what powers to give to their agent and when an agent tries to determine what actions are legally within their power.
For this reason, many states have begun adopting the Uniform Power of Attorney Act (UPOAA). Created in 2006 by the Uniform Law Commission, this law aims to establish universal rules for POA contracts across states. It determines which powers are included in the document by default and which must be explicitly addressed in order to be bestowed on an agent.
Provisions of the UPOAA
- A POA is valid and durable as soon as it’s signed. According to geriatric care manager and certified elder law attorney, Buckley Anne Kuhn-Fricker, J.D., this provision is important because it gives a principal the flexibility to decide how involved they want their agent to be while they’re still in possession of their faculties. For example, a financial agent could handle the day-to-day tasks of paying bills and buying food, while the principal continues to make their own investment and major purchasing decisions.
- Rules for compensation for decision-makers, gift-giving, and any beneficiary changes must be specifically outlined in the POA document. One common question people have about serving as an agent under POA is whether they can get paid for making decisions on behalf of a loved one. Kuhn-Fricker says that any compensation must be clearly outlined in the document before it’s executed for payment to be legal. She advises older adults who are considering appointing someone as their agent to think about including a provision that allows that person to be paid for their services.
“Offering to pay a chosen POA is a way to incentivize them to take the extra time and care necessary to literally manage another human being’s affairs,” she explains.
The time and effort that an agent must invest to make decisions for another person can easily overshadow an agent’s own responsibilities and affairs. - Third parties, such as banks, doctors, and other family members, can’t be held accountable for upholding the decisions of an agent with a POA document that appears to be legitimate.
- A POA designation ends upon the death of the principal.
According to the Uniform Law Commission, as of 2022, a total of 29 states have enacted versions of the Uniform Power of Attorney Act, including:
- Alabama
- Arkansas
- Colorado
- Connecticut
- Georgia
- Hawaii
- Idaho
- Iowa
- Kentucky
- Maine
- Maryland
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Mexico
- North Carolin
- Ohio
- Oklahoma
- Pennsylvania
- South Carolina
- South Dakota
- Texas
- Utah
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming
Adoption of this legislation is pending in the District of Columbia, Massachusetts, Michigan, and Vermont. Because all 50 states have not yet enacted this precedent for POA documents, it’s always best to err on the side of caution when drafting them. A reputable elder law attorney can discuss your desires and concerns and draw up POA documents that clearly explain the type and extent of powers you want your agent(s) to have and any limitations they must abide by.
Source: Estate Planning FAQs: Power of Attorney (https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/power_of_attorney/)