What does a power of attorney do?
During estate administration, individuals have to decide important people to help with the process. These aspects of their estate, whether it includes their health or their assets, can be found in their will.
They may also wish to appoint someone as their power of attorney to represent their wishes when they are unable to do so themselves due to an unclear state of mind. With this role, the power of attorney has a lot of power for that individual. They take on the role as their agent. Some may wish to choose a friend, family member, or even a business entity as their power of attorney. In the end, they should choose someone that they trust to make important decisions for them.
What Are the Responsibilities of a Power of Attorney?
A power of attorney (POA) is a document that a person can sign to give someone else legal authority to act on their behalf if they become incapacitated.
The signer of the POA is often referred to as the “principal”, while the individual to whom authority is given may be referred to as the “agent” or the “attorney-in-fact”.
There are two main types of POAs: healthcare and financial. A principal may assign different agents to each of these roles, or the same agent could serve as both a principal’s healthcare and financial power of attorney.
Both healthcare and financial powers of attorney are what are known as “durable POAs”. This means that they remain in effect indefinitely, eve when/if the principal becomes incapacitated. There are also “non-durable POAs” that are more limited in scope. These types of documents are used to assign an agent temporarily for a specified purpose, such as signing an agreement or approving payments.
Who Can be Named an Agent/Attorney-In-Fact in Alabama?
In general, a principal can name anyone who is over the age of majority and legally competent to act as an agent/attorney-in-fact. There are a few limited exceptions to this rule. For example, an employee of the assisted living facility where the principal resides cannot be named to this role unless that employee is related to the principal.
The main considerations when deciding who to name as power of attorney are the individual’s competence, trustworthiness, proximity, and willingness to serve. This individual will be charged with making critical decisions in the areas of finances and/or healthcare if necessary, so they should be someone that the principal trusts to handle these matters.
A principal can name co-agents to serve in this role, although this may not be advisable as it could lead to conflicts. However, it is a good idea to name a “successor” agent who can serve if the principal’s first choice is not available.
Rights and Limitations of a Power of Attorney
The appointed agent/attorney-in-fact can be given broad or narrow duties and powers, depending on the wording of the POA document. Here are some examples of responsibilities that can be included inside the POA:
Healthcare Power of Attorney
- Choose which doctors and healthcare providers the principal uses.
- Decide where the principal should reside based on his/her current health condition. For example, they could be placed in a nursing home or assisted living center, or they could receive in-home care.
- Decide what types of medical procedures the principal should receive and which ones to forgo. These decisions should be based on the wishes of the principal as laid out in a living will/advance health care directive (if one exists).
Financial Power of Attorney
- Access the principal’s financial accounts for the purposes of paying their housing, healthcare, and other expenses.
- File tax returns on behalf of the principal.
- Manage the principal’s property.
- Collect debts on behalf of the principal.
- Make investment decisions on behalf of the principal.
- Apply for government assistance on behalf of the principal, such as veteran’s benefits, Medicare, Medicaid, etc.
Although an agent/attorney-in-fact may be given fairly broad powers to make decisions in the areas of healthcare and finances, there are some limitations to what they can do. Things that a power of attorney cannot do include, but are not limited to, the following:
- Alter a principal’s Last Will and Testament.
- Violate the agent’s fiduciary duty to act in the best interests of the principal.
- Change or transfer power of attorney to another individual. An agent can decline their own appointment as POA, but they cannot choose who would assume their duties if they are not willing to serve.
- Make decisions on behalf of the principal after their death. A durable power of attorney ends with the death of the principal, and at that point, the estate administration process begins.
Contact Our Reputable Southern Alabama Estate Planning Attorneys
Powers of attorney (POAs) are important estate planning documents that allow you to name a trusted individual (or individuals) to manage your healthcare and financial decisions in the event you become unable to do so. These documents need to be worded precisely and in a way that is in keeping with your needs and goals. This requires the assistance of an experienced estate planning lawyer.
Stone Crosby, P.C. has proudly served clients in Alabama for over 100 years. Our firm has experience handling matters including divorce and family law, estate planning and administration, business law, employment law, class actions, consumer protection, business law, real estate law, among many others. If you require quality legal representation, contact our firm today to schedule a consultation.