A Power of Attorney document lives up to its name; it is indeed a powerful legal agreement, one that gives another person (legally known as “the agent”) the right to represent you in all kinds of transactions, from signing a check or selling a car to buying a house and more. Power of attorney agreements can also cover business transactions. Typically a person (known as the “principal”) signs such a proxy agreement when they can’t be available—for health or distance reasons—to conduct transactions themselves.
Paradoxically, this important and empowering document is one of the easiest to execute since it doesn’t require supervision by the courts. Unlike other legal rights and identities we give to others—like a guardianship or trustee—conferring a power of attorney can be done with a common six-page statutory form, downloaded from the Internet. Get the signatures on it rubber-stamped by a notary and you’re good to go.
This convenient do-it-yourself version, however, comes with risk. The ready availability of this online document makes it easier for opportunists to misuse. We’ve all heard awful stories of people—often the elderly who are alone or infirm—being duped out of their assets by assigning administrative powers to someone they thought they could trust. Without oversight from the courts or an attorney, it’s easy for to be seduced by the convenience of having someone else manage their financial or property matters.
Another drawback of using a standardized power of attorney agreement, versus one prepared by a lawyer, is that it’s a one-size-fits-all document. Depending on your situation with family and friends, you may want to give limited or restricted rights and powers to the agent named in the document. Or elect to have dual agents—two people that have joint rights as your agents resulting in oversight over each other. A lawyer can customize the document to your needs and concerns, as well as be mindful of any potential conflicts of interest with the agent, so there’s more assurance that they’ll make the best decisions for you. In a quick meeting with your lawyer, the document can be tailored to balance oversight of the power you’re giving away.
As far-reaching as a power of attorney form can be, it does have some important limitations. What it doesn’t do, for instance, is give your agent the power to make serious medical decisions. For that you need to create a Living Will or a Health Proxy. I’ll explain more about those in a future column. In the meantime, be careful what you sign!