A Power of Attorney, often referred to as a “POA”, is a document you sign that allows you to appoint an “Agent” with legal authority to act on your behalf. Your Agent can then step in if you become incapacitated, are away, or otherwise unavailable to take needed action.

 

Don’t Confuse a POA with a Last Will & Testament

But a POA terminates upon death. When someone dies the Executor named in the decedent’s Will, after being authorized by the Register of Wills, can legally take action on behalf of the decedent’s estate. As stated by George Vasiliadis, an attorney with the law firm of Vasiliadis, Pappas Associates, “Wills are for what happens after you die. Powers of Attorney are for when you’re alive.” This article discusses powers of attorney for financial affairs only and not health care powers of attorney.

 

Why Have a Power of Attorney?

Contrary to what many believe, neither a spouse, adult child, nor other close family member or friend has legal authority to handle one’s financial affairs unless authorized to do so by a signed Power of Attorney. If you don’t have one it may be too late if you wait until becoming incapacitated because you might lack the requisite cognitive capacity to legally sign a POA.

 

What Happens If I Don’t Have a Power of Attorney and I Need Someone To Take Action?

  • Can’t buy, sell mortgage or lease your home or other real estate
  • Can’t pay your bills (unless joint account)
  • Can’t buy, sell or lease a car or any other personal property
  • Can’t sue or defend against a lawsuit
  • Can’t enter into contracts
  • Can’t authorize or refuse many health care treatments
  • Can’t make gifts, change beneficiary designations, re-title assets or do other estate planning
  • Can’t implement any retirement or estate planning or take action necessary to protect against impoverishment from nursing home costs

 

Not All Powers of Attorney Are the Same

What your Agent can or cannot do depends upon what is written in the POA instrument you sign.  A general grant of authority, that is, language indicating your Agent can do whatever you legally can is no longer valid in Pennsylvania and other States. Observes, Dionysios Pappas, an attorney with Vasiliadis Pappas Associates, “most of the powers of attorney we see do not provide essential authority to the named Agent.”  Given how important your POA will be if and when incapacity occurs, it is crucial that it be sufficiently detailed to ensure your wishes are carried out.

 

Beware: A POA is a Double-Edged Sword

Using a POA as an estate planning tool carries risk as well as reward. There are good but also potentially bad consequences.

GOOD:

A POA allows you to retain control over your affairs if you become incapacitated by giving guidance to a person you designate as your Agent who will step in and do what you would want done.

Without a POA a court will decide your financial and personal affairs and might not allow what you want, including asset protection against catastrophic health care costs. Who do you want in control, a judge who may not share your values or understand the concerns of you and your family or someone you choose who knows you and understands your priorities and will do what YOU want?

BAD:

If your Agent is dishonest, incompetent or simply fails to take the time or make the effort to properly manage your affairs, you can lose everything. In fact, financial abuse of POAs is a BIG problem in our society. As noted in the following excerpt from the statutory notice that appears in all Pennsylvania POAs:

“THE LAW PERMITS YOU, IF YOU CHOOSE, TO GRANT BROAD AUTHORITY TO AN AGENT UNDER POWER OF ATTORNEY, INCLUDING THE ABILITY TO GIVE AWAY ALL OF YOUR PROPERTY WHILE YOU ARE ALIVE OR TO SUBSTANTIALLY CHANGE HOW YOUR PROPERTY IS DISTRIBUTED AT YOUR DEATH.”

If you are concerned about making sure a particular person oversees your affairs if and when needed and that he or she will have the requisite authority, contact the lawyers at Vasiliadis Pappas Associates. Every person’s situation and needs are different. We can help.