If something tragic were to happen to you, such as death or incapacity, you need someone appointed to take care of your affairs. This is where a power of attorney document comes in. Without this key protection, the court may appoint someone— but, of course, this process takes time and money, and the judge may not select the person you would have. Furthermore, your representative may be required to seek court authorization to conduct certain activities that she may take immediately under a power of attorney. Even with documents in place, these five common power of attorney mistakes can cause real trouble — here’s how to avoid them.
5 Power of Attorney Mistakes to Avoid
1. Not naming alternates to step in if your named agent cannot act
It’s a good idea to appoint someone to serve as your agent in case your original choice is unable to serve or must resign their duty. You can name several alternates as backup agents. If your first choice cannot serve, your first alternate will take over. The second alternate would only take the job if your first and second choices could not do so, and so on.
It’s a good idea to use the criteria you used to select your first option when naming alternates. Your backups should be just as trustworthy and knowledgeable as your first named agent.
Remember that someone asked to serve as an alternate agent may be concerned about potential liability or blame for the original agent’s actions. To avoid this, you can include language in your Power of Attorney document indicating that a successor agent is not accountable for the actions of a previous one.
2. Not giving your agent the power to appoint someone if they need to
You can also instruct your agent (sometimes also called “attorney-in-fact”) to appoint someone to serve if none of the people you named are available. You accomplish this by granting your agent the authority to delegate work to others. Allowing your agent to delegate their duties to another person minimizes the possibility of the post becoming vacant due to the original agent’s unavailability or departure.
3. Neglecting formalities
Financial institutions routinely reject financial Powers of Attorney due to a failure to complete all requirements. For example, some institutions require specific features in a Power of Attorney document, such as notarization. Others would prefer that you use their form or attach a lengthy form and certification. Furthermore, obtaining, examining, and approving your Power of Attorney might take weeks or even months for certain businesses.
4. Not specifying the agent’s duties
Your state most likely has a statute that outlines these responsibilities by default. Unless your Power of Attorney states otherwise, your agent must follow those default rules. In some cases, deviating from the statutory requirements is the most efficient way to handle your affairs. You can get around these state rules by adjusting your agent’s duties in your Power of Attorney.
5. Not obtaining your Power of Attorney through an estate planning attorney
For infinite reasons, hospitals, long-term care facilities, real estate brokers, and a wide range of other entities may request that you complete their form Power of Attorney. Some of these arguments are valid, while others are not. Because a single phrase in any legal document can change its meaning, you should never agree to sign a Power of Attorney (or any other legal instrument) without first having your estate planning attorney analyze it.
Want to Avoid These Power of Attorney Mistakes? Attend a FREE Workshop
Avoiding common estate planning mistakes starts with understanding what they are. That’s why we created the 7 Hazards to Your Estate Plan Workshop—a free educational event that walks you through the biggest missteps people make (including with Powers of Attorney) and how to avoid them. After attending, you’ll have the opportunity to meet one-on-one with a Promise Law attorney for a complimentary consultation.
Reserve your seat today by calling 757-866-3730 or visiting our workshop page.
