Frequently Asked Questions (FAQs)
Here are answers to some of the most common questions people have about Power of Attorney documents.
What can a POA legally do?
An agent under a Power of Attorney can legally perform only the tasks that are specifically listed in the document. This is why careful drafting is so important. For a financial POA, this can include a wide range of activities like accessing bank accounts, paying bills, managing investments, selling property, and filing taxes. For a medical POA, it includes making healthcare decisions. However, an agent’s power is always bound by their fiduciary duty. This means every single action they take must be in the principal’s best interest. They cannot use the principal’s money for their own benefit or make decisions based on their own preferences if they conflict with the principal’s known wishes.
When does a Power of Attorney end?
A Power of Attorney is a powerful document, but its authority is not permanent. It automatically terminates upon any of the following events:
- The death of the principal.
- The principal revokes the document. As long as you are mentally competent, you can revoke your POA at any time, typically by signing a formal “Revocation of Power of Attorney” and notifying your agent and relevant institutions in writing.
- The purpose of the POA is completed (in the case of a limited or special POA).
- A date of termination specified in the document is reached.
- A court invalidates the document.
Can I have more than one agent?
Yes, you can appoint two or more people to serve as “co-agents.” However, this should be done with caution. You must specify in the document how they are to make decisions. Must they act unanimously, or can each one act independently? Requiring unanimous agreement can create a deadlock if they disagree, paralyzing the management of your affairs. Allowing them to act independently can lead to confusion and conflicting instructions. A more common and often more effective approach is to name one primary agent and then a first and second successor agent to serve one at a time if the primary is unable.
Does my agent get paid?
The POA document can state whether your agent is entitled to compensation. In most cases where a family member is the agent, they serve without pay. However, the agent is always entitled to be reimbursed for any reasonable out-of-pocket expenses they incur while acting on your behalf (e.g., mileage, postage, fees for consulting professionals like accountants). If you appoint a professional fiduciary or an institution like a bank’s trust department, they will be paid for their services according to a set fee schedule.
What’s the difference between a Power of Attorney and a will?
This is a critical distinction. A Power of Attorney is for managing your financial and healthcare affairs while you are alive but have become incapacitated. Its authority ends automatically the moment you die. A will (or Last Will and Testament) has no power or authority until after you die. Its purpose is to direct how your property should be distributed and who should be in charge of that process (the executor) after your death.
What is the difference between a Power of Attorney and a guardianship?
The difference is about control and cost. A Power of Attorney is a private legal document that you create to proactively choose who will make decisions for you. It keeps your affairs out of the court system. A guardianship (or conservatorship) is a public court proceeding that happens when someone becomes incapacitated without a Power of Attorney in place. A judge decides who is appointed to manage your affairs, and that person must regularly report back to the court. It is significantly more expensive, time-consuming, and restrictive for everyone involved. A durable POA is the key to avoiding guardianship.
What if a bank or hospital won’t accept my POA?
This can be a frustrating experience. Institutions may reject a POA for several reasons: they may believe the document is too old (some prefer recently signed documents), it may not grant the specific power the agent is trying to exercise, it may not be “durable,” or it may be an out-of-state form they are not familiar with. The best way to prevent this is to have a robust, state-specific document drafted by an attorney. If a valid POA is rejected, an attorney can often intervene on your agent’s behalf to compel the institution to accept it.
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