At some point in your life you will likely be asked to execute a power of attorney, or POA, or you will contemplate the need for one. A POA can be an extremely useful legal tool when used appropriately and carefully. Just like all legal tools, however, there are most advantages and disadvantages to using a POA. Before you consider executing a POA it is best to understanding the disadvantages of a power of attorney.
A power of attorney is a legal arrangement wherein you give someone (known as your “Agent”) the legal authority or power to act on your behalf. As the Principal, you have the ability to grant limited powers to your Agent or broad powers. When you grant your Agent broad powers it is known as a “General POA”. When the powers you grant are limited, it is referred to as a Limited POA or a Special POA. The disadvantages to a power of attorney will depend, to some extent, on the type of POA you create.
If you execute a general POA, one of the biggest potential disadvantages is that your Agent has the ability to devastate you financially. With a general POA your Agent can withdraw funds from all your financial and investment accounts, sell your property, and even enter contracts in your name. To avoid this possibility you may choose to use a limited POA; however, this can be problematic if the powers you wish your Agent to have are subject to change. For example, if you want your Agent to be able to withdraw funds from a specific account this week but from a different account next week you will need to execute two separate POAs.
In addition, a traditional POA will not survive your incapacity which is precisely when you may want the powers granted to your Agent to work. You can resolve this dilemma, however, by making your POA a “durable” POA. “Durable” simply means the POA survives the incapacity of the Principal.
Finally, many states do not allow medical treatment decisions to be made by an Agent even if the Agent has a general power of attorney. Instead, a very specific advanced directive must be executed giving an Agent the legal authority to make healthcare decisions for you. In Missouri, for example, the authority to consent to or prohibit any type of health care, medical care, treatment or procedure must be specifically listed in the POA agreement even if the POA is a general POA.
If you have specific questions or concerns about a power of attorney in Missouri, consult with an experienced Missouri estate planning attorney.
- Show Your Love by Creating an Estate Plan - March 21, 2023
- What You Need to Know About SECURE Act 2.0 - March 14, 2023
- The Lessons from Lisa Marie - March 7, 2023