As we age, the reality of death begins to seep in, and it becomes critical to explore how we might best prepare ourselves and our family for it. No matter how far off the moment might yet be, it’s important to be prepared. And one way to be prepared is to consider how one’s finances and medical matters should be handled, should one be incapacitated or busy.
A power of attorney grants someone else the ability to make choices in your name, specifically for medical and/or financial matters. Typically, a power of attorney document names one agent. If you choose to name one of your children an agent, there may be some resentment and anger from their siblings. If ignored or handled improperly, this can become a problem later down the road.
If you are an agent in a power of attorney document, or if you’ve named someone as your agent, it’s important to know what the agent can and cannot do – and what the options are, should you or someone else choose to challenge the agent’s competence and authority.
What Is a Power of Attorney?
A power of attorney is a document that details who has the ability to act in your place, in matters of medical treatment and financial affairs. Someone named your agent in a power of attorney document can pay your bills, manage investments, speak to doctors regarding your care, manage who can and can’t visit you at the hospital (provided there’s reason that visits might pose a threat to your health), and so on.
Another detail that requires exploration is the difference between a power of attorney and a durable power of attorney. A power of attorney document allows someone to act in your place. It allows you to legally double yourself, in the sense that another person will have the authority to make decisions in your name while you are alive, and mentally well.
Should you become mentally incapacitated, however, then a normal power of attorney will no longer be valid – in that sense, your agent can no longer act in your stead. You need a durable power of attorney for that. While subtle, the difference can be crucial. If you require a document that safeguards you from poor medical or financial choices while incapacitated, then it’s important to draft a durable power of attorney and choose a reliable and trusted agent.
What Are the Duties of an Agent?
An agent should, ideally, act in your best interest. They should be someone you trust completely, as they will be put in charge of making decisions that directly affect your health and financial status.
They have the ability to sell off troublesome assets, make gifts to reduce the size of your potential estate, manage your financial instruments, and make other critical choices in your name. They may authorize or refuse certain medical treatment. They have the right to withhold information about how or why they make decisions, and they don’t have to provide any information about your financial or medical status to the rest of the family.
But an agent isn’t infallible, and their status is not irrevocable. Should you or several members of the family fear that the agent you’ve chosen is incompetent, steps can be taken to revoke the power of attorney document and choose a different agent.
How Is a Power of Attorney Revoked?
If you are mentally fit to make the call, then you may revoke your agent’s power of attorney. This is as simple as drafting and filing a formal revocation, written, signed, notarized, and delivered to your attorney and any third parties (banks and institutions with whom your former agent was in contact).
If, however, you are mentally unfit, then your family may still try to have an agent’s power of attorney revoked by petitioning for a revocation at a court. If the court finds any evidence that the agent did not act in the principle’s (your) best interest, they make revoke the document and appoint a different agent or guardian.
Some reasons to revoke a power of attorney include:
- An agent who has moved far away.
- An agent who is no longer trusted or on good terms with the principle.
- An agent who is demonstrably incompetent.
- An agent who has acted in malice or purely out of self-interest.
You can also minimize the chances of a sibling spat by carefully appointing co-agents. It’s important to discuss such a choice with an estate planning professional and to choose careful legal language to avoid further complications and problems.
An Agent Is Not an Executor
A power of attorney document becomes effectively null and void when the principal of the document – the parent – passes away. The decisions made within a power of attorney document are only useful insofar that they give the agent declared by the document the ability to act instead of the principle – but once the principle has passed away, that power is revoked.
A power of attorney document has nothing to do with the decedent’s estate and does not give an agent the right to make any decisions regarding the execution and resolution of a will, trust, or estate in general.
That is the job of an executor – an appointed member of the family or professional third party, picked either by the courts or by the decedent before they passed, and appointed by a probate court in the early stages of the probate process.
Executors or estate administrators are responsible for filing for probate, managing the probate process, taking inventory of the estate, totaling its value, dealing with any final payments and tax issues, and divvying up the entirety of the estate according to the local laws and the decedent’s detailed wishes.
Executors appointed by the court for a probate process are different yet from appointed trustees, who manage the contents of a living trust set up by the decedent while they were still alive (the grantor). An executor can also be a trustee. The tasks are similar, yet separate, and no laws prohibit one person from occupying both positions.
The Bottom Line
Ultimately, you have the right to withhold who you decide to appoint as your agent. You can also sit down with your family and discuss it openly, if you so choose. There are ways to safeguard against a family feud due to estate planning choices, but it’s often easier to be forthcoming about how you choose to handle your financial and medical affairs towards the end of the road.
In either case, working with an estate planning professional can help you close off a lot of loopholes or avoid problems that may potentially come to haunt you or your family.