Considering leaving the country for a long time while maintaining a business or selling a home in the US? Were you recently diagnosed with a terminal or degenerative disease?
For these and many other issues, it may become necessary for someone to appoint a power of attorney. A power of attorney (POA) grants an agent or attorney-in-fact person or organization to have the authority to manage one's affairs, healthcare, or finances if they cannot. Granting someone a power of attorney can be a temporary or long-term arrangement.
There are many reasons to set up a POA. Unfortunately, there are many misunderstandings about POA. Below are the most common misconceptions we encounter about POAs.
Misconception #1: There is Only One Type of Power of Attorney
POAs can assist people in various ways. An experienced attorney can help establish the correct POA for someone’s unique needs. There are two main types of POAs:
- General Power of Attorney - This type of POA offers all power managing a principal’s assets.
- Special or Limited Power of Attorney - This type of POA offers focused authority. For example, a limited POA may allow an agent to conduct an auto sale of one vehicle.
Misconception #2: A Power of Attorney Will Survive Death
Every type of POA ends the moment the beneficiary dies. Instead, the last will decides who will manage the person’s estate.
Most types of POA end when the principal person dies or becomes incapacitated. If the person becomes mentally incompetent, their standard will ends.
Yet, if the principal individual established a durable POA, this agreement will extend until death, even if the person becomes mentally incompetent.
Misconception #3: The Power of Attorney Can Do Whatever They Want
Granting a POA may seem like an individual gives up all rights they have to an external power who could then serve their selfish interests. But, an agent has a fiduciary obligation - or a necessity to act with the principal person’s best interests in mind.
The fiduciary obligation may not be in the document, but it does not need to be in the document for it to be legally binding.
Even though this responsibility to act in a principal person’s best interest is a big part of the POA, it is crucial that a beneficiary chooses someone they trust.
Get the Help You Need
The above are the most common misconceptions related to power of attorney laws. The attorneys at Aldrich Legal Services have experience helping clients navigate the complexity of power of attorney laws. If you have other questions about power of attorney or would like to discuss if establishing a power of attorney is right for you or someone you know, reach out to us today at (734) 404-3000.