COMMON MISCONCEPTIONS ABOUT POWERS OF ATTORNEY
People sometimes delay their estate planning because they are unsure of what that entails. There typically may be confusion over what authorities the signed documents give to others.
One often misunderstood document is a power of attorney (POA). Below are some common misconceptions about POAs:
YOU JUST NEED TO DOWNLOAD A FORM OFF THE INTERNET.
On the surface, this is true -- powers of attorney forms are, indeed, available for cheap or free online. But that does not mean that the document that you download will adequately express your needs or even represent your particular situation.
For one thing, each state has specific requirements that must be met. A generic POA that you printed out may not meet California standards. Its terms may also be so ambiguous that it could face legal challenges, something that you certainly want to avoid.
ANYONE CAN SIGN A POWER OF ATTORNEY.
This is patently false. There are strict parameters over who is able to sign a power of attorney, as well as many other legal documents. In addition to being over the age of majority, the person must be of sound mind and competent.
The ravages of Alzheimer's and other dementia-causing diseases render people incapable of signing legal documents that reflect their intentions. This is why it is so vital to conclude your estate planning efforts before a disease robs you of the ability to legally convey your wishes.
GRANTING SOMEONE YOUR POWER OF ATTORNEY ALLOWS THE PERSON TO DO WHATEVER THEY CHOOSE WITH YOUR ESTATE.
While you should only give such authority to persons whom you trust implicitly, it may relieve your mind to realize that your agent has a fiduciary obligation to you. In plain language, that means that the decisions your agent makes must always be in your best interests.
Also, having the power to act in someone's stead does not automatically mean that the agent has the right to take action. The right to act is relative to fiduciary circumstances. Any actions that don't promote the principal's -- your -- best interests are restricted.
When choosing a POA, in addition to appointing a trustworthy individual, it's prudent to make sure that the agent also has the business smarts to effectively carry out their duties.
THERE'S ONLY ONE TYPE OF POWER OF ATTORNEY.
There are two primary forms of powers of attorney -- limited and general. The former is typically granted to someone on a transactional basis, e.g., to purchase and/or sell the property for the principal.
The latter is much broader and gives the agent additional authority to act, albeit always in the principal's best interest. Here in California, however, the Probate Code contains exceptions to the authority granted by a general power of attorney.
California requires that certain powers be expressly detailed. The authority to create trusts for the principal and to gift and disclaim gifts all must be expressly spelled out in a general POA to be valid. Simply stating something vague like "and all other powers are granted" will not pass muster with the probate courts.
There is another type of POA that you will want to execute -- a health care power of attorney. Alternatively known as a health care proxy or Health Care Advanced Directive (HCAD), this document authorizes your agent to make medical decisions for you once you no longer are able to make them for yourself.
It differs from a living will or a Do Not Resuscitate (DNR) order. Those are intended as legal guidelines for health care professionals to follow regarding a person's wishes about resuscitation measures to take and other related matters.
DURABLE POWERS OF ATTORNEY EXTEND BEYOND DEATH.
Powers of attorney are only valid during the principals' lifetimes and terminate at death. A regular power of attorney also terminates at the principal's incapacity, whereas a durable power attorney survives mental incapacity.
Learning more about basic estate planning documents can give peace of mind to you when you need it the most.