Nominating a Power of Attorney is a crucial aspect to any Estate Plan. After all, this allows someone to make medical, financial, and other important life decisions on your behalf in the event you are unable to do so. It is important to choose someone you trust for the role, and for them to accept the responsibility.
As you consider who to select, it can be helpful to understand the power of attorney rights and limitations. This will help illustrate exactly what your POA can and can’t do — which can help provide more context as you begin Estate Planning. Keep reading to learn more about the following:
How Does Power of Attorney Work?
Power of Attorney works by allowing someone to make important decisions on your behalf, should you become incapacitated or medically unable to do so. The purpose of officially nominating a POA is to ensure that someone can act on your behalf in a timely manner should they ever need to. Without a POA, your family will typically have to go to court to appoint a guardian to handle these duties.
There are a few different types of POA, but the nomination process for each is similar. You can start by creating a valid Will online and then nominating a Power of Attorney using a state standardized form. They are tasked with putting your needs above their own, making it crucial to select a trusted individual for the role. Once signed and notarized, this paperwork will allow your POA to take action if certain conditions are met.
What Rights Does a Power of Attorney Have?
A Power of Attorney, often referred to as the Agent, has the right to make important life decisions on behalf of the person who nominated them, referred to as the Principal. Here are just some of the power of attorney duties:
- The right to make healthcare decisions, including diagnostics and continuing or stopping medical treatments.
- The right to select and hire doctors or caregivers.
- The right to decide on long-term living arrangements as they relate to medical care.
- The right to open a lawsuit on behalf of the Principal and sign any necessary legal documents.
- The right to receive certain forms of income on behalf of the Principal.
- The right to make personal, business, or investment-related financial decisions.
- The right to open bank accounts, write checks, or sell property for the Principal.
- The right to purchase life insurance policies for the Principal.
What Are the Limitations of Power of Attorney?
- While a Power of Attorney has robust legal rights when it comes to managing the affairs of the Principal, there are certain limitations to be aware of. These limitations are in place to help regulate the role of POA:
- The POA cannot transfer the responsibility to another Agent at any time.
- The POA cannot make any legal or financial decisions after the death of the Principal, at which point the Executor of the Estate would take over.
- The POA cannot distribute inheritances or transfer assets after the death of the Principal.
- The POA cannot change or invalidate your Will or any other Estate Planning documents.
- The POA cannot change or violate the terms of the nominating documents — otherwise they can be held legally responsible for fraud or negligence.
- The POA cannot act outside of the Principal’s best interest.
- The POA cannot make decisions before the document comes into effect — conditions will be outlined with approval of the Agent and Principal.
- The POA cannot be officially nominated unless the Principal is of sound body and mind.
- The POA cannot use the Principal’s assets or money as their own.
- The POA cannot take compensation beyond what is outlined within the POA agreement.
Amending a power of attorney (POA)
If you decide that you want to make a change to your POA you will need to tell your estate attorney. The POA can only be amended by you, the granter, if you are capable of making and understanding this decision.
Examples of amendments that can be made are:
Removing power(s) from the POA
Add an attorney, this could either be a joint or a substitute attorney
Adding in power(s) or
Some amendments can be complicated to apply, however this will depend on the extent of the changes you wish to make. It is often easier and it costs the same, for the old POA to be revoked (cancelled) and a new POA registered in its place. Having a new POA may help to avoid any confusion or misinterpretation when an attorney is exercising their powers.
If a registered POA is to be revoked i.e. cancelled, you (the granter) will need to send:
A statement explaining your wishes and
A fully completed revocation certificate (schedule 2)
Types of Amendments
There are 2 types of amendments;
• Simple administrative amendment, or
• Full deed of amendment.
What Is A Simple Amendment?
This covers straight forward administrative amendments, such as a change of name or an address. You will need to provide your attorney with written details of the change that is to be made. It is very important that our records are kept up to date and that you tell us if the granter or any attorney changes address. A form provided if it involves a change of address. The amendment will become effective on the date it’s registered by your attorney.
What Is A Full Deed Of Amendment?
A full deed of amendment covers situations where you, i.e. the granter, wish to add a joint or substitute attorney, or amend the terms of a particular power or add extra powers etc. A fee is charged for registering the amendment.
You will need to inform your attorney about the amendment you want to make in the form of a ‘deed of amendment’. This document can be typed or handwritten. You should state clearly what is to be amended and sign and date the document. There is no set style for this notice. Please remember to specify which POA the amendment applies to. You should be aware that when the amendment is registered, that a copy of your deed of amendment will be attached to the new certificate of registration and copy of the initial POA document.
Some amendments can be complicated to apply, however this will depend on the extent of the changes you wish to make. It is often easier and it costs the same, for the old POA to be revoked and a new POA registered in its place. Having a new POA may help to avoid any confusion or misinterpretation when an attorney is exercising their powers.
Adding A New Attorney
If new attorneys are being added, they will need to confirm in writing that they are willing to act. If they are given continuing powers i.e. financial related powers, they must also confirm they are not currently declared bankrupt. Substitute attorneys only need to provide confirmation when they become active.
When Is An Amendment Not Suitable?
If a POA has been terminated an amendment cannot be made. Situations where a POA is terminated include:
- After the death of a sole attorney where there is no substitute or joint attorney
- After the revocation/cancellation of the full POA
- After the revocation/cancellation of the appointment of a sole attorney where there is no substitute attorney
Free Consultation For A Power of Attorney
It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, contact Ascent Law for your free consultation. We want to help you!