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What Power of Attorney (“POA”) Does

      Using Power of Attorney documents can be confusing, like most legal contracts. Yet these tools can enable your older loved ones to be taken care of past their cognitive or health decline without costly and daunting court procedures.

     POA allows a person (known as the principal) to decide who can act on their behalf when they become incapable of making sound decisions. The person appointed to look after them is known as the agent. 

     From there, it’s important to distinguish the two main types of POA, which are medical and financial.  Medical POA allows the agent to make decisions about the care the principal receives if they become incapacitated.  A financial POA allows the agent to manage money for the principal when they can no longer do so. This is usually the same person given both these responsibilities but they can be separated.

POA Rights and Limitations

     The powers of an appointed agent can be broad or narrow based on how the document is written. Here are some acts a Healthcare POA can do:

• Decide on the medical care the principal receives 
• Choice of the doctors and care providers the principal uses
• The decision to decide where the principal lives
• Choose what the principal eats
• Choose home caregivers of the principal

     A financial POA may be able to:

• Access the principal’s financial accounts to pay bills
• File taxes on behalf of the principal
• Make investments on behalf of the principal
• Collect debts from the principal
• Mange property of the principal
• Apply for benefits such as Medicaid

Limits of a POA

      A POA document with no limits typically gives the agent broad power over financial decisions. However there are still rules by which the agent has to abide by. They are always expected to act in the principal’s best interest and are a fiduciary of the principal. Agents with POA cannot:

• Change a principal’s will
• Break their fiduciary duty to act in the principal’s best interest.
• Make decisions on behalf of the principal after their death. This is only if they are appointed as the trustee or executor of the principal’s trust or will, respectively.
• Change or transfer POA to someone else. An agent can decline to serve as POA  at any time; however, they cannot transfer their responsibilities to someone else unless the person it’s transferred to is a co-agent. An agent alone cannot decide who takes over as a POA.

The Uniform POA Act

     Each state has statues that govern how POA documents are written. This can get complicated when a principal decides what powers to give the agent and what actions are legally within their power. For this reason, many states have begun adopting the Uniform POA Act. This establishes universal rules across states. It determines what powers are to be included in the POA document. 

Provisions of a POA:

• A regular POA is valid once signed
• Rules for compensation must be laid out, and beneficiary changes must be outlined 
• Third parties cannot be held accountable for upholding a POA that appears to be legitimate
• A POA ends upon the death of a principal 

     The best way to protect yourself is to consult your local elder law attorney. They will ensure you have the best plan for your and your family’s future.   In addition, an elder law attorney can consult you about naming special powers within your documents that could allow you the flexibility to engage in Medicaid planning in the future while preserving tens of thousands of your assets.