Powers of attorney are extremely useful documents in the event of mental incapacity. These documents are also useful in less dire situations, such as when the principal is out of the country or simply unable to sign an urgent document. Nonetheless, rumors concerning potential pitfalls with powers of attorney continue to swirl, including the ever-present concern that an agent can make off with the principal's money. The following helps to dispel some of the more common myths associated with both healthcare powers of attorney and financial powers of attorney. As always, be sure to contact an experienced attorney with any questions you may have about the implications of executing a power of attorney in your own estate plan.
Myth #4: I don't need to appoint my spouse as my agent – we're married!
Contrary to popular belief, the law does not create a natural power of attorney relationship between spouses. Some assets that are titled jointly, such as a joint bank account, may be handled or transacted by either spouse as needed. However, if an asset is titled solely in the name of one spouse or the other, it will generally require authorization via a power of attorney in order for the other spouse to gain access to the asset or account. Also, some jointly owned assets, such as real estate, require both signatures to sign a deed. If one spouse is incapacitated and cannot sign the deed, having a power of attorney in place can allow the other spouse to sign on behalf of the incapacitated spouse.
Myth #3: I should name all my children as my agent to avoid conflict
Actually, the opposite may be true. Oftentimes, the notion of selecting all the adult children as agent may seem like the fairest way to divvy up the responsibility. However, in the event the agents do not agree on a course of action, this could backfire and create even more friction. Options to avoid this including naming just one adult child as an agent – or specifying that agents may act concurrently but independent of one another.
Myth #2: A living will requires me to select ‘DNR' – and I don't want that!
A living will allows the drafter the opportunity to elect certain options when facing an end-of-life situation. The document does not trigger until the point at which a doctor has determined that you are likely to succumb to the illness or injury in force. As well, a ‘do not resuscitate' directive is not the only option available, and you may elect that you would like medical interventions to prolong your life indefinitely.
Myth #1: If I execute a power of attorney, my agent could steal all my money!
A power of attorney does not grant the agent unfettered power to make financial and legal decisions on behalf of the principal. By contrast, the agent is in a “fiduciary” relationship with the principal, meaning all decisions must be made either at the direction of the principal or in the principal's best interests based on the specific powers included in the power of attorney.
If you are considering executing a power of attorney, please contact Andrew Byers, attorney at law.