The benefits of a highly detailed, comprehensive power of attorney are numerous. Unfortunately, many powers of attorney are more general in nature and can actually cause more problems than they solve, especially for our senior population.
However, a highly detailed, comprehensive power of attorney can be the most useful estate planning document in someone’s arsenal. With that said, a proper starting point to any discussion surrounding the execution of a power of attorney is to emphasize that the proper use of a power of attorney (as an estate planning and elder law document) depends on the reliability and honesty of the appointed agent.
The agent under a power of attorney has traditionally been called an “attorney-in-fact” or sometimes just “attorney.” However, confusion over these terms has encouraged the terminology to change so more recent state statutes tend to use the label “agent” for the person appointed by the document to act on your behalf.
The “law of agency” governs the agent under a power of attorney. The law of agency is the body of statutes and common law court decisions built up over centuries that dictate how and to what degree an agent is authorized to act on behalf of the “principal”–the individual who has appointed the agent to represent him or her. Powers of attorney are a type of agency-creating document. In most states, powers of attorney can be and most often are unilateral contracts–that is, signed only by the principal, but accepted by the agent by the act of performance.
Much has been written about financial exploitation of individuals, particularly seniors and other vulnerable people, by people who take advantage of them through undue influence, hidden transactions, identity theft, and the like. Even though exploitation risks exist, there are great benefits to one individual (the principal) privately empowering another trusted person (the agent) to act on the principal’s behalf to perform certain financial functions.
To learn more about establishing a comprehensive power of attorney, stay “tuned in” for our next blog in the coming days.