Power of Attorney and common misconceptions. (EP.6 Show Notes)
- Life & Legacy Law Firm
- Jul 6, 2020
- 3 min read
In Episode 6 we discuss Power of Attorneys (POAs) and how they can be a powerful tool in your estate plan and the common misconceptions surrounding it. NOTE: The following topics and discussions are supplemental to the podcast show. Information below may not be comprehensive and may contain overly simplified explanations for complex circumstances.
OVERVIEW
What is a power of attorney?
It is a legal document that delegates authority from one person (the principal) to another (the agent). In Florida, a power of attorney can be executed by any adult who has capacity to do so. Once signed, the power of attorney has effect and may be used by the agent for the benefit of the principal.
Signing Requirements
In order for a power of attorney to be legally effective, it must be signed by the Principal (and must have capacity to do so) in the presence of two attesting witnesses and in the presence of a notary who then notarizes the Power of Attorney.
MISCONCEPTIONS
Power of attorney survives death?
A common question we receive from clients is what should they do if the power of attorney is used after their death. To their relief, we inform them that a power of attorney can only provide the agent powers the principal has in the first place. If the principal is dead, the power of attorney is rendered unenforceable and legally ineffective.
Power of attorney gives my agent too much power!
Although a power of attorney is a very powerful tool that MAY provide the agent with a lot of access and power over the principle's affairs, a principal can restrict the types of powers an agent has. A general power of attorney is a type of POA that gives a blanket "ALL" powers to the agent. Florida has abolished general power of attorneys and instead requires that all power of attorneys list out each power individually. This can help a principal restrict the powers she wishes to give to her agent.
This is especially useful since many POAs are signed for a particular task. For example, a principal may need their agent to access one particular bank account for them. The POA can specifically provide the agent with the power to only handle that one account. That agent would have no power or access to any other of principal's assets.
Power of attorney allows someone to abuse their power for their own benefit!
Although abuse of power is a very REAL problem, especially in the world of estate planning, guardianships (more on that in our next episode), and power of attorneys, there are precautions a principal can take to mitigate the risk of a "rogue" agent -that is- someone who abuses the power for their own personal gain.
For starters, an agent is bound by law. When an agent takes on the responsibility laid out in a power of attorney, they are required to act in a fiduciary capacity. Fiduciary capacity means that they must act prudently and in the interest of the principal. In essence, the agent is serving the needs of the principal and their actions must match that goal. For them to do otherwise would be a breach of that responsibility and would open the agent to potential civil liabilities and -perhaps- criminal charges.
In addition to the legal protections afforded by the law, a principal must take care in who they choose as their agent. It is imperative that the principal choose someone they not only trust, but someone who they know has very little reason to abuse their power. The perfect agent doesn't exist, but making sure to choose someone who you deem trustworthy, understands your needs, and is financially responsible is a good precaution to preventing a rogue agent scenario.
Resources:
ABA Tool Kit for Health Care Advance Planning
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