The Advantages and Abuses of Powers of Attorney

Powers of Attorney are legal documents whereby the maker of the document (the “Principal”) authorizes another (the “Agent”) to act for him under circumstances that can be narrow or broad, depending upon the language of the Power of Attorney. There are Powers of Attorney governing financial affairs and Powers of Attorney governing medical affairs.

Such Powers of Attorney are executed by elderly individuals in need of assistance managing their affairs either due to a permanent or temporary disability and/or by individuals as part of an “Estate Plan” that anticipates the need of such assistance in the future. Such anticipatory Powers of Attorney become effective only upon the disability of the Principal.

Powers of Attorney are also made by individuals who will be unavailable for a specific period of time. For example, a military member who is facing deployment might execute a power of attorney in favor of his spouse so that his affairs may be handled in his absence. Similarly, an individual relocating for employment may execute a power of attorney giving a friend or family member the authority to sell the Principal’s residence.

Powers of Attorney for Financial Affairs may be general or limited. General Powers of Attorney are very broad and allow many types of transactions, including the sale of real estate. Limited Powers of Attorney convey to the Agent the authority to handle a specified task, such as attending and signing documents at a real estate settlement, or selling and transferring title to a vehicle.

Anyone 18 years of age and older can execute a Power of Attorney in Pennsylvania, but the Principal must have legal capacity at the time that he/she reads and signs the document. If the Power of Attorney is “durable”, it remains valid even after the Principal no longer has legal capacity, perhaps due to an injury or an illness such as Alzheimer’s disease. All Powers of Attorney in Pennsylvania executed since 1993 are durable unless otherwise stated.

Powers of Attorney for Medical Affairs delegate to the Agent the power to act on the Principal’s behalf regarding medical issues and decisions in the event the Principal is unable to make those decisions himself. The agent under a health care Power of Attorney may authorize the principal’s admission to a medical, nursing, residential or similar facility, enter into agreements for care, and authorize medical and surgical procedures.

For all Powers of Attorney there are a few things to consider to help protect yourself against fraud:

• Choose the right person to act as your agent under a Power of Attorney. Make sure that the individual is someone you trust will make decisions on your behalf in accordance with your wishes and to your benefit when your wishes are not known.

• Be careful what powers you give to an agent under a Power of Attorney. Make sure you read every word and understand what powers are included in any Power of Attorney before you sign the document. Powers of Attorney can be broad or narrow, allowing a full grant of authority to act for the Principal or providing only a limited Power of Attorney for a particular event or situation, i.e. Power of Attorney for the sale of real estate.

• Consider appointing an alternate person to act as your Agent in the event your primary Agent is unavailable for some reason.

• In some limited circumstances, you may consider appointing two persons to serve simultaneously. While this may be more cumbersome and less efficient, it may provide a process of checks and balances in that your agents must agree on decisions and actions. This could be especially true if you are unable to name a person you trust completely and fully.

• Prevent premature use of the Power of Attorney by your agent, you can withhold the document until it is needed or require that a non-agent hold the document with full instructions for release to the agent.

• Ensure that a Power of Attorney can only be used if and when you become disabled by including language requiring that the Agent also present a letter from your physician stating a diagnosis of incompetence.

• You may require your agent to account periodically to a disinterested third person.

• Your Power of Attorney should only be written by your lawyer, pursuant to your specific instructions.

The attorneys at Knight & Moskow, P.C. are well versed in the preparation of Powers of Attorney and can provide invaluable advice concerning these important documents. To discuss your family law needs in Delaware County, Chester County, Philadelphia County or Montgomery County, call our office at (610) 565-8210, or contact us via email at inquiries@knightandmoskow.com to schedule a consultation.