Often in our practice, we begin by explaining to people the various legal documents that they should have as a foundation. More often than not, most people believe that they only need a Last Will and Testament and do not understand the significance of a Power of Attorney (hereinafter “POA”). This article will answer the frequently asked questions we receive about POA documents.
What is a Power of Attorney?
A Power of Attorney is a written document used by a person referred to as the “Principal” in order to authorize another person called the “Agent” to do certain acts for the Principal named in the document.
Who should serve as the Agent? In the past, people commonly used to choose their oldest child, local child, or male child, but the Agent does not have to be any of these people, nor does it even have to be a family member. The Agent should be someone you know you can trust to handle your finances and legal affairs, and to follow your wishes.
What if I do not have a relative or close friend to serve as my Agent? If you do not have a relative or close friend to serve as your Agent, then there are private agencies and banks that will serve as your Agent, usually for a fee.
Can my Agent be paid for helping me? You may pay your Agent for the services that he or she is providing; however, you would not want to just give your Agent money sporadically or informally. You should create a legal contract with the Agent, sometimes referred to as a “caregiver agreement” that sets out the services that your Agent is providing and the price that you will pay your Agent. This should also be declared as income for your Agent on his or her income tax return so that it does not appear that you are giving your Agent a gift.
How much power will my Agent have? Your Agent will have whatever power you specifically give him or her in the document. There are some powers that are presumed which are listed in the Pennsylvania Power of Attorney Law and there are other powers that must be given specifically. For example, if you want your Agent to have the power to create or change rights of survivorship, you must specifically state that power in the document.
What if my Agent does not follow my wishes? If your Agent does not follow your wishes as they are stated in the document and goes outside of the scope of the authority granted in the document, then the Agent could be held both criminally and civilly liable.
Can I change my mind about who I want to serve as my Agent? As long as you have capacity to create a Power of Attorney, you can change your Agent as many times as you want.
When does a POA become effective? It all depends on the language stated in the document. If the Power of Attorney is a springing Power of Attorney that springs into effect upon an event that happens, then it will be effective upon that specified event occurring. For example, if the Power of Attorney says that it becomes effective upon my incapacity, then my Agent can only act for me when I am declared to be incapacitated. However, if the Power of Attorney states that the document is effective immediately, then the document is effective immediately upon signing.
I am named as Executor of my parent’s will. Is a POA Agent the same thing? No, the POA Agent acts for someone during their lifetime; whereas an Executor of a Will acts for the person after he or she has passed away. The authority granted to a POA Agent ceases to exist when the Principal passes away.
Where do I get a POA? Can I just go to the bank? No, you cannot get a Power of Attorney from the bank. A Power of Attorney is a legal document and should be obtained from an Attorney who prepares such documents.
Can I name all of my children to act as my Agent at once? You can name more than one Agent to act at a time; generally I would not recommend that you name more than one Agent at a time because if they do not agree, their dispute will end up in Court. Even if they do agree, however, the signing of checks and documents by all agents can be overly complicated and burdensome to the Agents acting at once.
As you can see, many questions come up with regard to legal documents and especially Power of Attorney documents. It is important for everyone to realize that they not only need a Power of Attorney, but also that the appropriate language be detailed in the Power of Attorney in order to meet your goals and expectations.
By Jessica F. Greene, Esquire, LL.M. in Elder Law