effectively granting
Power of Attorney
 A Power of Attorney is an advanced directive
in which the drafter appoints an agent, known
as the “attorney-in-fact,” to make financial
decisions on their behalf. Advanced Directives
are documents which are executed to give
direction to an agent in the event of disability
or incapacity. While most people have
embraced the need for a Health Care Proxy or
are adequately familiar with the purpose of
appointing a health care agent, there is more
hesitation in terms of appointing someone to
handle financial affairs. This article will
attempt to point out the benefits of a properly
drafted power of attorney,while examining the
precautions.
Since a Power of Attorney can be used for
many different purposes, the drafter has options
with respect to the type of document to use.
The Nondurable Power ofAttorney is usually
executed for one-time transactions, such as a
real estate closing, where the seller will not be
present. This type of power of attorney will
not be effective in the event of disability or
incapacitation.
The Springing Power of Attorney limits the
ability of the agent to act only upon a certification
of the happening of a specific event that
would render someone unable to manage their
financial affairs. While at first glance this document
seems like a safe way of granting
authority to someone, it becomes very problematic
in circumstances where, for example,
the doctor or physician named in the power of
attorney is unavailable and the individual refuses
to undergo any type of medical evaluation.
Additionally, if the person is suffering from a
progressive disease such as Alzheimer’s, a physician
may be reluctant to certify the lack of
capacity at a particular stage, even though the
person is not attending to their financial affairs
in a reasonable manner. Sometimes however,
individuals choosing non-family as their agents prefer this type of document. The added security
of requiring a certifying event makes the
Springing Power of Attorney preferable. It is
advisable to have an alternate physician or individual
named in the power of attorney.
The Durable Power of Attorney is perhaps
the best way to ensure that an individual’s
financial affairs will be attended to should he
or she become incapacitated. The document
remains effective in the event of disability or
lack of capacity. It does not require the “triggering”
of a particular event or “certification”
to become effective.
The standard “Short Form Durable Power of
Attorney” can be purchased in any stationary
store selling legal forms, and therefore, executed
without the guidance or oversight of an
attorney. In the best of circumstances, this standard
form can be used without difficulty.
However, if you are unfamiliar with legal documents,
it is recommended that the Short
Form Durable Power of Attorney be executed
as part of a larger plan, and under the guidance
of an attorney. An improperly executed form
will be invalid.The document conforms to the
statutory requirements and must be accepted
by banks. Brokerage firms, however, are not
bound by the particular law, and therefore, it is
advisable to inquire if a brokerage firm will
require execution of their own form. In the
worst of circumstances, there have been countless
incidents of financial abuse in situations
where the power of attorney was executed at
the urging of someone purporting to have the
person’s best interests in mind, when they are
really seeking personal gain, often leading to
financial abuse of an elderly or infirm person.
Should the power of attorney not be
sufficient, there may be no alternative but to
commence a guardianship proceeding. This of
course undermines the intention of the person
who executed the document, as one would believe that a power of attorney prevents the need for
guardianship. Many guardianship proceedings are brought
on behalf of someone previously named as the “attorneyin-
fact,” because the document did not provide sufficient
authority to manage the person’s affairs. For example, the
powers listed in the short form limit transfers or gifts to the
annual exclusion rate; give broad and general authorities
which are not always considered applicable to a particular
circumstance; do not address applying for government
benefits such as Medicaid nor the establishment of a Supplemental Needs or PooledTrust. To be as effective as
possible, the power of attorney should be tailored by an
elder law attorney to address all aspects of financial management
in the event of incapacitation.
Having advanced directives in place can prevent a
guardianship proceeding, thus maintaining privacy. A welldrafted
power of attorney, in conjunction with a health care
proxy and living will, are the best ways to ensure one’s
wishes are carried out in the event of permanent disability.
— Deborah S. Ball, Esq.
Deborah S. Ball, Esq., is a private attorney whose practice concentrates on elder law, trusts and estates and guardianships.
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