Like most legal undertakings, setting up and enforcing power of attorney (POA) documents can be a confusing process. Yet, these essential tools can help aging adults and their families create a solid plan to address future care needs and gain peace of mind.
The Two Types of POA
POA documents allow a person (the principal) to decide in advance whom they trust and want to act on their behalf should they become incapable of making decisions for themselves. The person who acts on behalf of the principal is called the agent.
From there, it is important to distinguish between the two main types of POA: medical and financial.
A medical POA (also known as healthcare POA) gives a trustworthy friend or family member (the agent) the ability to make decisions about the care the principal receives if they are incapacitated. A financial POA gives an agent the ability to make financial decisions on behalf of the principal. It is common to appoint one person to act as an agent for both financial and healthcare decisions, but in some cases it may be wise to separate the two.
What Can a POA Do?
The powers of an appointed agent can be broad or narrow, depending on how the POA document is written. Here are a few examples of the kinds of decisions an agent can make with each type of POA.
A healthcare agent can decide:
• What medical care the principal receives, including hospital care, surgery, psychiatric treatment, home health care, etc.
• Which doctors and care providers the principal uses.
• Where the principal lives. This includes decisions regarding residential long-term care, such as assisted living, memory care and nursing homes. The principal must be able to afford their living arrangements and the financial POA must approve these costs.
• What the principal eats.
• Who bathes the principal.
A financial agent can:
• Access the principal’s financial accounts to pay for health care, housing needs and other bills.
• File taxes on behalf of the principal.
• Make investment decisions on behalf of the principal.
• Collect the principal’s debts.
• Manage the principal’s property.
• Apply for public benefits for the principal, such as Medicaid, veterans benefits, etc.
What Can’t a POA Do?
A generic POA document that does not contain any limitations typically gives an agent broad power over medical or financial decisions. However, there are still a few things that an agent cannot do. One of the fundamental rules governing an agent’s power is that they are expected to act in their principal’s best interest.
An agent cannot:
• Change a principal’s will.
• Break their fiduciary duty to act in the principal’s best interest.
• Make decisions on behalf of the principal after their death.
• Change or transfer POA to someone else. An agent has the right to decline their appointment at any time. However, unless the principal named a co-agent or alternate agent in the same POA document or is still competent to appoint someone else to act on their behalf, an agent cannot choose who takes over their duties.
The Uniform POA Act
Each state has statutes that govern how power of attorney documents are written and interpreted. This can complicate matters when a principal decides what powers to give to their agent and an agent tries to determine what actions are legally within their power.
For this reason, all states have begun adopting the Uniform Power of Attorney Act (UPOAA). Created in 2006 by the Uniform Law Commission, this law aims to create universal default rules for POA contracts across states. It determines which powers are included in the document by default and which must be explicitly addressed in order to be bestowed on an agent.
According to the Uniform Law Commission, as of 2019, a total of 26 states have enacted versions of the Uniform Power of Attorney Act, including Virginia. Because all 50 states have not yet enacted this precedent for POA documents, it is always best to err on the side of caution.
A reputable elder law attorney can discuss your desires and concerns and devise POA documents that clearly explain the extent of power you want your agent(s) to have and any limitations they must abide by.
Source: Aging Care: https://www.agingcare.com/articles/things-you-can-and-cant-do-with-poa-152673.htm
Estate Planning FAQs: Power of Attorney (https://www.americanbar.org/groups/real_property_trust_estate/resources/estate_planning/power_of_attorney/); Power of Attorney Act)(https://www.uniformlaws.org/committees/community-home?CommunityKey=b1975254-8370-4a7c-947f-e5af0d6cb07c)