Review Powers Agent has in Power of Attorney

A power of attorney (POA) is one of the most critical documents in any estate plan. It allows you to name a trusted person (called an agent or attorney-in-fact) to make financial decisions on your behalf. This authority can help manage your affairs if you are traveling, ill, or unable to act due to age or incapacity.

However, not all POAs are the same. Some grant broad authority, while others limit the agent to very specific tasks. The powers you give—and how clearly they are outlined—can determine whether your agent can manage your finances effectively or whether they’ll face unnecessary legal hurdles.

Reviewing what powers are granted in your POA ensures that your wishes are followed and your finances are protected if you ever need help managing them.

Types of Authority in a Power of Attorney

Financial powers of attorney can be customized to meet your specific needs. Some common powers granted in a general POA include:

• Paying bills and managing bank accounts
• Buying or selling real estate
• Filing taxes
• Managing retirement accounts and investments
• Collecting government benefits, like Social Security or VA payments

In some cases, individuals may limit the POA to one area, such as selling a home, known as a limited or special POA. Others may want a durable POA, which remains in effect if the person becomes incapacitated.

You can also decide when the POA goes into effect. A “springing” POA only takes effect under specific conditions, such as medical certification of incapacity. A general POA becomes effective immediately upon signing.

Risks of Overbroad or Vague Powers

While granting broad authority may seem convenient, it also carries risks. If powers are too general or unclear, the agent may take actions you didn’t intend, or financial institutions may refuse to honor the document altogether.

Banks, insurance companies and other entities often require specific language in a POA before they allow someone else to access your accounts or manage investments. A vague or outdated POA could result in costly delays or court intervention.

That’s why it’s essential to regularly review the language of your POA with an estate planning attorney and ensure that it reflects your current wishes and financial situation.

Understanding What an Agent Can’t Do

Legal limits to what an agent under a POA can do exist. For example, they cannot:

• Make or change your will
• Transfer powers to someone else, unless specifically authorized
• Act outside the scope of the authority granted in the document
• Use your assets for their own benefit, unless explicitly permitted

If you die, the power of attorney immediately terminates. Your executor or trustee then becomes responsible for managing your estate.

Because of these limits, choosing the right person to serve as your agent is as important as the document itself. Pick someone trustworthy, organized and capable of handling financial matters responsibly.

Establish Your POA with Experienced Legal Guidance

A POA is only effective if it’s properly written, executed and accepted by the institutions your agent will interact with. An estate planning attorney can help ensure that your POA includes the right powers, meets state requirements and aligns with the rest of your estate plan.

They can also guide you in choosing the right agent, setting conditions for when the POA takes effect and avoiding common pitfalls, such as unintentionally revoking a spouse’s rights or giving an agent too much control without oversight.

When created correctly, a POA is one of the most empowering and protective tools you can create. Contact our estate planning office for qualified guidance on creating a power of attorney that meets your needs.

Key Takeaways

• A power of attorney can be broad or limited: You decide what authority your agent has and when it takes effect.
• Vague POAs may be rejected: Financial institutions often require specific language to honor the agent’s authority.
• Agents can’t change your will or act after death: Their powers are limited to what’s authorized in the document and end when you pass away.
• Reviewing your POA avoids mistakes: Regular updates ensure that the powers align with your current needs and state laws.
• Legal support helps clarify your intent: An estate planning attorney ensures your POA works as intended and protects your interests.

Legacy One Law Firm, APLC is an estate planning and probate administration law firm in Los Angeles, California, serving families throughout the State. Schedule a quick and easy consultation with our estate planning attorney, Sedric E. Collins, Esq., or call 323-900-5450.