A power of attorney (POA) is a legal document that authorizes an individual to perform certain functions on your behalf. For example, a POA can give a friend, family member, or any other trusted advisor, such as your estate probate attorney, the authority to make decisions about your property, wealth, assets, or investments.
The extent of legal authority provided by a POA depends on the stipulations written in the document. However, the POA can also be written as a “springing” power of attorney that only takes effect when someone becomes mentally incapacitated through illness or injury. Springing powers of attorney are often not honored due to the incapacity stipulation. More and more, banks and financial institutions are scrutinizing power of attorneys and springing power of attorneys are more susceptible to being turned down.
To ensure the POA is in effect upon signing, the power of attorney must be a durable power of attorney.
What is a Durable Power of Attorney?
A durable power of attorney (DPOA) is essentially a POA document that remains in effect even after you become mentally incapacitated. It provides your loved ones, or other trusted persons, the same level of legal authority in a POA to act on all important affairs as you. These duties may include financial powers such as managing your investments, paying your bills.
If you fail to secure a durable power of attorney in SC (South Carolina) before something happens to you, your loved ones may need to go to probate court and go through a lengthy, and potentially costly, legal process called a conservatorship to secure the authority to handle your affairs in your stead. There is also the chance that a third-party conservator will be appointed instead.
What are the Types of Power of Attorneys?
Power of Attorneys generally fall into two categories: one address your healthcare decisions and the other for your finances. Below, we’ll delve into both:
Healthcare Power of Attorney
A healthcare POA gives your agent legal authority to make medical decisions on your behalf. For example, through this document, your agent can:
- Speak to your attending physician to discuss healthcare options.
- Receive private medical updates on your current condition.
- Uphold all your directives or personal wishes that pertain to your medical care, which can include refusing treatment, taking all available measures to prolong life, and stopping all attempts to resuscitate you if you so wish.
Financial Durable Power of Attorney
A financial POA allows your agent to take care of your financial decisions on your behalf. Through a properly drafted and honored POA, your authorized agent can:
- Manage your investment accounts, retirement funds, and real estate.
- Take care of your medical bills and other financial obligations.
- Run your business in your absence.
How Can a Durable Power of Attorney Help You?
Your agent under a DPOA acts according to the powers granted under the terms and stipulations in the document. They can act on your behalf without court supervision. Any businesses and entities they transact with can refer to the document as proof of their authority to act as your agent.
A DPOA is a crucial document in estate planning. When executed, the DPOA can:
- Eliminate the need for lengthy court proceedings to appoint a conservator to protect your interests.
- Prevent questions about your true wishes and intent.
- Bestow your agent the authority to transact with agencies and organizations on your behalf.
- Provide immediate access to funds and other assets.
As the principal in the DPOA, you have complete control over the scope of the agent’s authority. You can choose to provide full or limited authority over the decisions they can make in your stead, which can depend on how much you trust the individual. To ensure greater control during incapacity and to avoid the risk of conservatorship we recommend you consider revocable living trust planning.
Speak with a Trusted Probate Attorney at Wiles Law Firm, LLC.
A durable power of attorney is a powerful legal tool that can help eliminate many of the legal hurdles for a loved one to act on your behalf and set your affairs in order if you are no longer able to do so.
Although setting up the legal documents is reasonably straightforward, it’s still recommended to seek the expertise of an estate probate attorney to help you with the document. An experienced estate attorney can help you include stipulations most advantageous for you and your loved ones.
What are the downsides of the Power of Attorney?
According to the Wall Street Journal, an alarming number of banks and financial institutions often reject power of attorneys. The New York Times, in an article entitled “Why Is My Power of Attorney Powerless” also points to this trend.
Why is this occurring? Why are powers of attorney being rejected? The reason is many banks and financial institutions do not want to be a party to fraud. They are concerned the Power of Attorney that is presented to them might no longer be in effect. The financial institution fears that by honoring the POA, they may be actually going against their client’s wishes and giving their customer’s money to someone who may steal or misuse the funds. In many cases, financial institutions do not want to take on this liability.
What is the solution? Having a POA is better than not having one. For all the reasons previously mentioned a POA is important. In addition to having a POA, for many Americans a revocable living trust is an additional control to ensure the right person is in charge. The likelihood of a trustee being rejected is much lower than the likelihood of a POA being rejected.
If you require assistance with a revocable living trust or a durable power of attorney, Wiles Law is here to help. By leveraging our years of experience, our attorneys can be a legal resource for you and help make the process more seamless. Contact our offices today to schedule a consultation.