Elder Law: The Role of Power of Attorney
Setting up and enforcing a power of attorney (otherwise known as a POA) can be confusing. Yet it is an essential estate planning tool – particularly for aging individuals and their families attempting to create a solid plan to cover future care needs and protect their family.
Power of attorney documents allow the principal to decide in advance who they want to trust to act on their behalf if they become incapacitated and cannot make decisions for their own care or finances, etc. The individual the principal designates as able to act on their behalf, is referred to as the agent.
What are the Two Types of POA?
A medical power of attorney (or healthcare POA) designates an agent (usually a trustworthy friend or family member) with the ability to handle decision-making for the care and treatment of the principal if they are incapacitated and cannot make their own decisions.
A financial power of attorney gives the designated agent the ability to make financial decisions on behalf of the principal if they are unable to do so on their own. Many people choose the same person to act as agent for both their healthcare POA and their financial POA, but it is not necessary, and in some cases, it can be beneficial to use different agents.
What Can You Do With a POA?
The powers afforded an agent can be very broad or relatively narrow. The powers granted depend on the wording in the POA document. A few examples of the types of decisions an agent can handle with medical power of attorney include:
- What kind of medical care the principal receives
- Which doctors and facilities the principal uses
- Where the principal resides (including long-term care, assisted living, etc.)
- What the principal eats
(Decisions made by the medical power of attorney agent often rely on the financial means to cover the costs and the approval of the financial agent to spend funds from the estate on the care, facility, etc.)
A few examples of the types of decisions an agent can handle with a financial power of attorney include:
- Accessing the financial accounts of the principal to pay for healthcare, housing, bills, etc.
- File taxes for the principal
- Manage the principal’s investments and make new investment decisions, etc.
- Collect debt owed to the principal
- Manage the principal’s property
- Apply for public benefits programs on behalf of the principal (i.e., Medicaid, Veterans’ benefits, etc.)
What Can You NOT Do With a POA?
Even with a generic POA that does not include any specific limitations to the agent’s power, there are still particular actions that the POA cannot take on the principal’s behalf. The agent is always expected to act in the best interest of the principal. They also cannot take the following actions using their power as the agent:
- Change the principal’s will
- Break their fiduciary duty (NOT act in the principal’s best interest)
- Make decisions on behalf of the principal after their death, unless the agent is also named executor of the will, or the principal dies without a will and the agent petitions the court to become administrator of the estate
- Transfer the POA to someone else. The agent can decline their position. However, unless the principal named a co-agent or alternate agent in the same document, or is still able to appoint someone else to act on their behalf, an agent is not able to choose who takes over their duties.
If you have any questions about how to use a power of attorney or who to appoint as your agent, please get in touch with the experienced Florida estate planning attorneys at Elder Solutions Law Firm today.