The Easy-To-Follow Answers You've Been Waiting For...
Have you recently signed a Power of Attorney or considering doing so in the near future? Maybe you just got appointed as the Agent for a loved-one and now you’re scratching your head wondering what’s next. Regardless of your personal situation, you’ve got some questions that need answered. And you want a knowledgeable attorney to help make that happen.
Well, my friend, I’ve got some news for you. Today, you’re going to get the answers you’ve been waiting for. But if you’re looking for a stuff-shirt lawyer to write in flowery legalese you should probably just click that ‘back’ button on your web-browser. Here, I’m skipping the legal mumbo jumbo and giving it to you straight. Sound good? Great, let’s explore Power of Attorney.
To Help You Clearly Understand This Subject We’re Breaking It Down Into 6 Easy-To-Follow Parts:
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What is a Power of Attorney?
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Power of Attorneys Rights and Limitations
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How Do You Use a Power of Attorney?
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How to Manage Finances with a Power of Attorney
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The Relationship Between Power of Attorney have and Other Legal Documents?
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Guardianship vs. Power of Attorney.
1. What is Power of Attorney?
A Power of Attorney is one of the most important legal documents that you can ever sign. It is a legal tool that allows you to appoint someone to make legal decisions for you, if and when you’re unable to act for yourself. The person signing the POA is the Principal. The person acting on your behalf is the Agent or the Attorney-in-Fact.
Creating a POA is vitally important in order to avoid financial catastrophes if become incapacitated in the future. When someone fails to establish these documents their loved-ones are forced into Guardianship court. And as you can probably guess, this is unnecessarily burdensome and expensive.
Your Agent can assist you to the extent you have granted the powers to do so in your POA documents. Some documents have broad-sweeping powers covering nearly everything imaginable. Other documents are extremely limited in scope. Simply look over the language in your documents to discover the specific powers you are granting your Agent.
What is a Power of Attorney Used For?
People can use different types of Power of Attorney documents for different purposes. But one thing they all have in common is the document will lay out all of the specific powers that an Agent can use.
Common provisions give the Agent the ability to buy and sell property and real estate. While others allow the Agent to execute legal contracts for one purpose or another. Still others allow the Agent to assist in the health care decisions for a principal. With few exceptions, you can empower your Agent to do nearly every single legal act that you can do on your own.
What is a General Power of Attorney?
A General Power of Attorney allows a Principal to choose a person to manage his or her legal affairs. This type of Power of Attorney grants a broad variety of powers to the Attorney-in-Fact. It essentially allows an Agent to perform any and all legal acts that the Principal can perform for his or herself.
When drafting these documents an Estate Planning Attorney in Arkansas will list all of the Agent’s powers in the document. And, if you were to review the document for yourself you could see the powers are very broad.
Most people get motivated to sign a General Power of Attorney as a way to plan for an uncertain future. Doing so allows the Principal’s loved-ones to make decisions in the event they become incapacitated or incompetent – all with a minimum of stress and frustation.
What is a Durable Power of Attorney?
Contrary to popular belief, a regular Power of Attorney terminates whenever the Principal becomes incapacitated or incompetent. This means that the Agent cannot help the principal if they develop late-stage Alzheimer’s or fall into a coma.
This is precisely the opposite result that most people signing a Power of Attorney would want. As a result, a new type of Power of Attorney document called a Durable Power of Attorney was created by our law-makers.
A Durable Power of Attorney becomes effective immediately after the Principal signs it. And, these documents continue to work if the Principal becomes incapacitated at a later date.
*Please note, for the remainder of this article I’ll be referring to a Durable Power of Attorney as a ‘Power of Attorney.’
How Do You Get Power of Attorney?
How to get a Power of Attorney is simple for the most part. The Principal simply contacts an Arkansas Estate Planning Attorney and explains his or her wishes. The lawyer will listen to why you want to create the Power of Attorney. They will also ask who you want as your Agent and successor Agent. Finally, the lawyer will meet with the Principal and discuss the importance of the documents. After answering any questions the attorney will then notarize the Principal’s signature. Once the documents are signed they are legally valid.
Now, let’s see what happens if you want to be appointed as an Agent for a loved-one. The process is largely the same with a little twist. First, it is okay if you initiate contact with an attorney on behalf of the Principal to explain the situation. You’ll explain who you are and what you are trying to accomplish. The lawyer will ask questions like: How are you related to the Principal? Is the Principal in good mental health? What kind of relationship does the family have with each other? Etc.
The lawyer should also explain to you that they represent the Principal – not you. And before notarizing the Principal’s signature, the lawyer should meet with the Principal one-on-one to answer their questions and explain the importance of the legal documents. During this time the attorney will also ask questions to establish if the Principal has the capacity to execute the legal documents.
Can a Person with Alzheimer’s Sign a Power of Attorney?
Good question. There are a myriad of dementia legal issues that are best discussed with an Arkansas Elder Law attorney. That said, a person must have the necessary ‘mental capacity’ to sign a valid Power of Attorney. This means the Principal must understand the basic idea of the Power of Attorney during the moment it is signed. If the document is executed during a moment of clarity it will be a legally valid document – no matter what happens next.
People mistakenly believe that a principal is barred from executing legal documents if he or she has an Alzheimer’s diagnosis. This is not true. So long as the Principal is experiencing a lucid moment at the time of execution the Power of Attorney will be 100% valid. This is true even if the person forgets signing the document or is later confused. This is great news for families that care for a loved-one with Alzheimer’s.
What if the Person with Alzheimer's Lacks Capacity to Sign?
Unfortunately, some people’s Alzheimer’s progresses to a point where they no longer have mental capacity to sign. In these cases the family must petition the Court for Guardianship in order to manage the legal decisions on behalf of the Principal. This bites because Guardianship is expensive and often results in unforeseen consequences that are financially harmful to the Principal.
If a Guardian is appointed and the person later needs nursing home care, the family will have to pay out of pocket until they’re broke. Instead, had a Guardianship been avoided the family has options to protect the Principal’s assets.
If a member of your family is suffering from Alzheimer’s please consult with a skilled Elder Law Attorney in Arkansas. The Elder lawyer can create a custom Power of Attorney that will enable the family to do Medicaid Planning and Long-Term Care Planning if the need arises. This can lead to a long-term care savings of up to $69,872 per year for the Principal.
Who Should I Make My Power of Attorney?
The law provides that anyone over the age of 18 who is mentally competent can serve as an Agent under a Power of Attorney. In addition, attorneys, CPAs, and financial institutions can also serve as Attorneys-in-Fact under certain circumstances.
There is no formal education, certification or training requirements to serve as an Attorney-in-Fact. However, when you’re asking “Who should I make my Power of Attorney?” it is important to carefully and thoughtfully consider your options. Because a Power of Attorney document is so powerful, it could be financially disastrous if it fell into the wrong hands. Be sure the person you make as Power of Attorney is trustworthy, sensible, and even tempered. If possible, it is best that they are moderately good at managing money and stress.
Also, important to note is that your Agent will have a ‘fiduciary responsibility’ to act in your best interests. This is a high standard imposed by law that says your Agent must act fairly towards you or else they can face criminal and civil penalties.
2. Power of Attorney Rights and Limitations
What Does a Power of Attorney Allow You to Do as the Agent?
Like I said above, the Principal can give an Agent authority to do nearly every legal act that he or she could do for themselves. That said, the Agent’s powers are limited to the acts that are specified in the legal document. That’s why it’s crucial that a Power of Attorney be written in such a way that the Agent clearly understands what he or she is authorized to do.
If you are an Attorney-in-Fact and you’re unclear about what the Power of Attorney allows you to do, then contact the lawyer who drafted the legal document. If you cannot reach the lawyer, then reach out to an Arkansas Estate Planning lawyer to help you assess whether you can take the action that you want to take without incurring liability.
What can an Attorney-in-Fact not do?
There are a handful of things that an Attorney-in-Fact is prohibited from doing under the law regardless of the any contrary language in the Power of Attorney.
For instance, an Agent cannot execute, revoke or amend the Last Will and Testament on behalf of the Principal. An Agent cannot deal with the social security administration or veteran’s administration.
Likewise, an Attorney-in-Fact cannot vote in elections or attest to facts personally witnessed by the Principal – such as giving testimony in a legal proceeding.
It’s also important to note that an Agent under Power of Attorney cannot perform acts on behalf of the Principal that the Principal is contractually obligated to perform. For instance, an Agent may not paint a portrait or author a book on behalf of the Principal.
Can a Power of Attorney Override My Decisions?
On occasion people are reluctant to sign a Power of Attorney that is immediately effective for fear that his or her Agent could use the document to override their own decisions.
Thankfully, this cannot happen. No matter the situation, an agent under Power of Attorney can never override the decisions of the Principal. This is true even if the principal has memory issues, dementia or Alzheimer’s disease.
Is There Code of Ethics for Attorneys-in-Fact?
Yes. The law views an Attorney-in-Fact as a ‘fiduciary’ and imposes a strict standard of conduct that regulates their actions. As a fiduciary, the Attorney-in-Fact is in a legal relationship with the Principal that’s based on a high level of trust. The Attorney-in-Fact must act with a duty of care and a duty of loyalty to the Principal. They must also act in the best interests of the Principal and be fair to the Principal at all times.
If an Attorney-in-Fact violates the trust of the Principal and breaches his or her fiduciary responsibilities then grave consequences can occur. The Agent can be subject to criminal liability (such as jail-time, probation, etc.) and civil liability (forced to repay the Principal for his or her wrongdoing and made to pay punitive damages as punishment for the wrongdoing).
That said, if the Power of Attorney document specifically authorizes the Agent to perform a particular act, the Agent cannot be held liable for doing that act – no matter what. For example, if an sells a piece of real estate to a third-party and the Principal is later unhappy with the terms of that agreement. The Principal will not be able to persevere in a lawsuit against the Agent unless he or she can convince the court that the Agent acted in bad-faith or unreasonably when negotiating the sale.
3. Using the Power of Attorney
When is a Power of Attorney effective?
A Power of Attorney document is effective immediately once the Principal signs it. Unless of course the Power of Attorney specifically states that it is effective upon the disability of the Principal or some other future event. This type of legal arrangement is known as a “Springing Power of Attorney” because it springs to life upon the occurrence of an event.
How Do I Use a Power of Attorney to Do Something for the Principal?
First, look over the Power of Attorney to confirm that you are authorized to take the intended action. Next, take a copy of the Power of Attorney to the financial institution or third party that you want to take action with. Once you have done so, explain to the third party who you are and that you want to conduct an act on behalf of the Principal as his or her agent under Power of Attorney.
The third party should review the terms of the Power of Attorney document to confirm your ability to act. In some instances the third-party will immediately allow you to act on the principal’s behalf. In other instances, the Power of Attorney document will pass to the third-party’s legal counsel before you are permitted to take action.
Also, in Arkansas there’s no law requiring an Agent or Principal to record a Power of Attorney in the courthouse before using it. Similarly, there’s no law that requires an Agent produce the original Power of Attorney in order to act. A simple photocopy should work fine.
Lastly, it is incredibly important that when signing documents you clearly indicate that you are signing in the capacity as the Attorney-in-Fact, and not in your own personal capacity. This ensures you won’t become personally liable for the Principal’s debts to the third-party.
How Do You Sign as Power of Attorney?
As I just mentioned, it is vitally important for you to clearly indicate that you’re signing on behalf of the Principal as the Attorney-in-Fact and not as yourself. This is important because if you fail to make this clear then you will be on the hook for the Principal’s debts and obligations owed to the third-party.
During my 9 years as an Arkansas Elder Law attorney I’ve seen some pretty horrific incidents occur when an Agent fails to sign in his or her capacity as Attorney-in-Fact. In one instance, an Agent signed paperwork at a local hospital after the Principal suffered a life-threatening health event. After, the hospital helivaced the Principal to Little Rock, Arkansas for an emergency surgery and he later died. The Agent was on the hook for a $23,432 helivac bill. Not good!
To avoid a financial crisis and incurring personal liability you must clearly convey in your signature that you are signing as a representative of the Principal. While a pain-in-the-butt and super-lengthy, it’s best to sign documents like this:
“John Doe by Jane Doe as POA” – or – “John Doe by Jane Doe as his Attorney-in-Fact”
Don’t get caught up in making the wording exactly right. Just be sure to clearly state that you are signing on behalf of the Principal.
Can a Company Refuse to Accept a Power of Attorney?
There are a handful of different reasons why companies would refuse to accept a Power of Attorney. Oftentimes, third-parties are reluctant to accept Power of Attorney because they want to avoid financial and legal troubles if something goes wrong.
That said, so long as the Power of Attorney has been legally executed and is still valid (not revoked) a third party must honor the document in most circumstances.
In fact, there are instances where the law will impose liability on a third party that refuses to honor a Power of Attorney document. In Arkansas Code Ann. 28-68-301 you can find a statutory Power of Attorney document. If a company refuses to accept this document, the law provides they can be held liable for damages resulting from that refusal, court costs and attorneys fees.
It may sound crazy, but sometimes even a delay in recognizing a Power of Attorney can lead to damages and liability. A small reasonable delay can be expected when a third-party wants to pass the document to its legal department before honoring it. However, a reasonable delay can become unreasonable at some point.
This can really damage the Principal’s financial well-being and cannot be tolerated. If you find yourself in this position, you should contact a Elder Law lawyer in Arkansas to assist you in rectifying the situation.
Why Would a Bank Refuse to Honor a Power of Attorney?
Banks, financial institutions and other third parties want to protect themselves from liability. It can be scary when a person shows up with a simple legal document that purports to give them broad sweeping powers over the financial affairs of a Principal.
Banks are unaware of the circumstance surrounding the execution of the document. They’re unaware if it is valid, if it’s been revoked or amended, if the Principal was coherent and competent when it was signed, or whether or not the Principal is still living.
Because banks want to avoid liability when something goes wrong they will sometimes refuse to honor a Power of Attorney document because they believe that they are protecting the Principal from a potential abuse.
While this is often not the motivation of the person trying to use the Power of Attorney, it is understandable to see where the bank is coming from.
Also, note that banks and other third-parties give more trouble to people that try to use older Power of Attorney documents. While the law doesn’t require a Power of Attorney to be updated after so many years, it is good practice to keep your legal documents up to date to avoid this hardship.
Can You Sue a Bank for Refusing to Accept a Power of Attorney?
The law imposes liability on banks and other parties for any damages or losses caused by unreasonable refusal of a Power of Attorney document – as well as court costs and attorneys fees on some occasions.
While it may be possible to sue a financial institution for misconduct, this can be burdensome and not fix the issue at hand – helping the Principal.
More often than not, a call from an Estate Planning lawyer in Arkansas or an Elder lawyer in Arkansas can help the bank understand the law and accept the Power of Attorney.
4. Financial Management and the Liability of an Attorney-in-Fact
What is a fiduciary responsibility?
As the Agent under a Power of Attorney you are a fiduciary to the Principal. As a fiduciary, you are entrusted with the responsibility of managing the financial affairs of another person and are in a unique position of trust.
A fiduciary has a duty of loyalty and must act fairly when dealing with the Principal. The Attorney-in-Fact is also responsible for prudent and reasonable management of the Principal’s affairs.
While you have a responsibility to act reasonably, you will not be responsible or liable to third-parties for any of the Principal’s debts unless you personally sign contracts or agree to take on those obligations.
This means that if the Principal owes medical debts or credit cards, you are not personally responsible to pay those debts if the Principal defaults.
Can an Attorney-in-Fact be Sued for Making Bad Investment Decisions?
You should be prudent and use care, caution, and reason when you are managing the affairs of the Principal. So long as you are acting in good faith and being moderately reasonable it’s unlikely that you will be financially liable for a single bad investment decision.
That said, a person can sue another person for virtually any reason whatsoever and you can’t stop that from happening. Conversely, whether that person could prevail in a lawsuit is a totally different story. If the Principal sues you for mismanagement of his or her finances the court will look beyond the one bad investment. Instead, the court will analyze the overall investment strategy and portfolio as well as your pattern of behavior when assessing any liability.
You will only be liable for losses from a bad investment decision if a court finds that you’re overall investment strategy and behavior was imprudent. As an Attorney-in-Fact it may be wise to cover yourself and seek professional guidance and assistance in managing the Principal’s investments.
Should I Diversify Investments as Agent Under Power of Attorney?
The law requires you to diversify investments for a Principal. This means that you should spread the Principal’s finances out amongst a variety of investments in order to hedge the risk of loss should one or a few particular investments not pan out. This guards the Principal against a financial catastrophe in the event all of his or her eggs were in one basket.
If you believe in good-faith that it’s not in the Principal’s best interest to diversify his or her investments then you do not have to. However, this can increase the risk that you can be held liable for damages in a lawsuit.
If you have no experience in investing and are unskilled or uncertain how to prudently invest the Principal’s funds –seek the advice of a certified financial advisor or investment manager.
Is an Attorney-in-Fact Liable for Losing Money in All Cases?
A court will determine if you’re liable for any loss resulting from a bad investment by assessing your overall conduct investing the Principal’s wealth. You will not be judged according to the performance of any one or two financial decisions.
So, if you act reasonably cautiously and prudently with the Principal’s investments – you will not be liable for any losses. And remember, even highly conservative and seasoned investors can lose money sometimes.
While it’s hard to think about losing money that belongs to the Principal, it’s nothing you personally failed to do if you were acting with his or her best interest in mind and were being reasonable.
Can an Agent be Too Cautious When Managing the Principal’s Investment Portfolio?
Contrary to popular belief, an Attorney-in-Fact can be too cautious when investing the Principal’s money. The law provides that you have a duty to invest the Principal’s funds in a way that reasonably produces income while reasonably protecting the capital.
What Things Should You Consider to Prudently Invest the Principal’s Money?
As an Attorney-in-Fact you should consider the size and complexity of the Principal’s savings and estate versus his or her own ability to effectively manage these finances as the Attorney-in-Fact. In some situations, the best move is to consult professionals to help guide you in managing the assets of the Principal.
In other situations, consider the following list of issues when you’re making investments on behalf of the Principal:
- The overall economic conditions (Is it a bull market or bear market? Is the economy in a boom or on the verge of a deep recession? Is the housing market on its way up or down?);
- The potential effects of inflation;
- The known and reasonably foreseeable tax consequences of an investment;
- The positive and negative effects one investment decision will have on the other investments within the Principal’s investment portfolio;
- The overall return – including, but not limited to, the production of income and appreciation of capital;
- Transactions costs – like brokerage fees, sales commissions, and indirect costs such as seeking the advice of tax professionals to guide you on tax strategies and implications.
Can an Attorney-in-Fact Hire People to Do Acts for Them?
Normally an Attorney-in-Fact is free to hire attorneys, financial advisors, tax professionals and other advisors to help them perform their duties.
The law shows you cannot delegate your responsibilities under the Power of Attorney to another person unless the Principal specifically grants you that authority in the Power of Attorney document.
5. What Relationship Does a Power of Attorney Have With Other Legal Documents?
What is the Difference Between an Attorney-in-Fact and an Executor of a Will?
A person signing a Last Will and Testament will name an Executor in the document. The Executor is responsible for settling the legal affairs after the person signing the Will has passed away.
Unlike an Agent under Power of Attorney, the Executor can only manage the financial affairs of a person who has died. Even then the Executor cannot act until the Will has been formally admitted to the Probate court.
Conversely, an Attorney-in-Fact can manage the affairs of a Principal while he or she is still living. An Attorney-in-Fact’s rights terminate upon the death of a Principal.
What is the Difference Between a Power of Attorney and Revocable Living Trust?
A Power of Attorney document gives an Agent the ability to do specific actions for the Principal during the Principal’s lifetime. Similarly, a Revocable Living Trust designates a person to do things on behalf of the Trustmaker during the Trustmaker’s lifetime. This person is called a ‘Trustee.’
Similar to an Attorney-in-Fact, the Trustee of the trust can do banking transactions, buy and sell real estate and personal property, and handle other financial transactions related to the management of a person’s estate.
That said, the Trustee’s power to manage assets is strictly limited to the assets that have been titled to the Trust. The Trustee’s powers do not extend to property that is not owned and titled in the name of the Trust.
To illustrate this point, let’s say a Trustmaker owns a house and he signs a Warranty Deed that conveys ownership of the property to his or her Trust. The Trustee will then have power over that asset.
On the other hand, if a Trustmaker has a checking account that is titled in his or her name personally, then the Trustee could not touch that account. In that instance, the Attorney-in-Fact would have power of that individually owned bank account.
Also, different than a Power of Attorney, a Trust is created to transfer the assets and estate of the decedent to his or her beneficiaries after the person has died. This means that the Trustee continues to have the authority to manage and distribute the Trust assets after the Trustmaker has died. Conversely, a Power of Attorney terminates upon the death of the Principal.
As you can see, some transactions are best suited for a Trustee and some an Attorney-in-Fact. For that reason, it’s important to have both legal documents in your Estate Plan.
Can an Attorney-in-Fact Execute Estate Planning dDocuments on Behalf of the Principal?
There’s a lot of stuff outside of naming a Power of Attorney that goes into a properly designed Estate Plan. Especially so when you start talking about avoiding Probate, and offsetting Long-Term Care costs, and minimizing taxes, and all that jazz.
The overarching purpose of Estate Planning is to ensure that a person’s assets and well-being are managed without unnecessary burdens or frustrations. Part of this equation is to ensure that his or her Estate transfers to their intended Beneficiaries upon death and that loved-ones are taken care of in accordance with the decedent’s wishes.
The most common Estate Planning tool is a Last Will and Testament. But, an Attorney-in-Fact cannot create a Will, amend a Will, or Revoke a will on behalf of a Principal.
On the other hand, a Power of Attorney document may permit an Attorney-in-Fact to fund a Trust so that assets can pass without the necessity of Probate court. Additionally, a well designed Elder Law Power of Attorney can have provisions that allow an Agent to create, amend and revoke a Trust on behalf of the Principal. This is often useful when the family is trying to help the Principal protect his or her assets against stratospheric nursing home costs. It’s also useful for Asset Protection purposes.
Aside from Trusts, the Power of Attorney can provide an Agent with powers to do transactions on behalf of the Principal that will benefit people after his or her death. One such example is a provision in a Power of Attorney that allows the Agent to execute a ‘Beneficiary Deed’ and a ‘Life Estate Deed’.
By signing this document, the Agent can ensure the Principal enjoys ownership over said property during his or her lifetime. After the death of the Principal, said property will then immediately transfer to the remaindermen in the Deed or other Grantees without the cost of delay of Probate court.
What is a Healthcare Power of Attorney or Advanced Medical Directive?
A Healthcare Power of Attorney or Advanced Medical Directive is a legal document that allows a person to designate an Agent or Healthcare Proxy to make his or her health care decisions if and when he or she is unable to do so for themselves.
Sometimes the power to make medical and health care decisions is included in a general Durable Power of Attorney. While other times, an estate planning attorney in Arkansas will create a separate document for health decisions and for financial decisions.
Because a Healthcare Power of Attorney is created exclusively for the purpose of managing health care decisions, these documents are often much more comprehensive and effective than a General Power of Attorney.
Also note, many states have different guidelines about how to create a legally enforceable Healthcare Power of Attorney. This often includes stricter notarization and witness requirements.
To ensure a physician’s office and other health professionals will feel comfortable honoring your legal documents you should be specific and clear about your medical wishes.
If you foresee a need to make health decisions on behalf of the Principal or if you want to ensure your loved-ones can make health decisions on your behalf, consult with an Elder Law attorney in Arkansas to advise you on how to make this happen.
What’s the difference between a Power of Attorney and a Living Will?
A Living Will, otherwise known as a Directive to Physicians, is a legal document that outlines a person’s wishes about end-of-life care. These documents provide the specific wishes as to the termination of medical procedures and assistance if a person becomes irreversible and terminable.
Oftentimes a Living Will and Healthcare Power of Attorney are referred to as ‘Advanced’ Health Care Directives because they are created before a person becomes incapacitated or incompetent.
If a person becomes ill or incapacitated and is no longer able to communicate his or her wishes regarding healthcare affairs, a Living Will is a legally enforceable instrument that can ensure their wishes are honored and adhered to.
In addition, these documents can help loved-ones better understand how you wanted to handle your end of life care and it can lessen the emotional burden of having to make such tough decisions without guidance.
Regardless if a person has created a Living Will, a Healthcare Proxy or Agent can make health decisions for a Principal provided the legal documents specifically and clearly grant these powers.
6. Guardianship Vs. Power of Attorney
What is a Guardianship?
A Guardianship is a formal legal proceeding whereby a person asks the court to be appointed as the decision maker for incapacitated person because that person is no longer able to act in his or her own best interests.
A Guardianship is significantly more costly than a Power of Attorney because it involves appearance in Court by a lawyer. As I mentioned above, in my discussion about Alzheimer’s patients, you should never rush into obtaining a Guardianship over a loved-one. It should be a last resort because of its complexities.
Normally a person with a court appointed Guardian will be unable to execute a legally valid Power of Attorney document. The Court would have to specifically authorize that act and this is unlikely because the Court declares a person legally incompetent in a Guardianship proceeding.
If you are an Attorney-in-Fact and find that a Guardian was appointed before the execution of the document – then you should contact an Elder Law lawyer in Arkansas to discuss the effects.
What Happens to a Power of Attorney if a Guardianship is Granted?
If a Principal signs a Power of Attorney document and is later a party to a Guardianship lawsuit, the Court may suspend the Power of Attorney until the court has a hearing about whether the document should remain in force. It is up to the Court to decide whether or not the Power of Attorney document should remain valid.
That said, Courts often prefer a Power of Attorney over appointing a Guardian. That’s because appointing a Guardian poses massive due process issues. The law provides that a Guardianship can only be granted if it is the least restrictive means to ensure the best interests of the incapacitated person are attended to. Also, in Arkansas a Attorney-in-Fact is presumed to be the proper person to serve as Guardian.
Conclusion
It can be overwhelming and confusing trying to understand Power of Attorney and the rights and obligations of the persons listed in the document. It’s important for you to contact a local Elder Law attorney in Arkansas if you have specific questions. Every case is different and the facts can greatly affect the outcome. Thanks for reading this article!