Frequently asked questions about...

A POA is a legal document that enables you to designate an agent to transact personal business on your behalf. It can be broad in scope, or tailored to a specific purpose.

For example, it's common for a purchaser or seller of a home to provide a POA to their lawyer, specifically for signing documents at the closing, if they are unable to attend.

In the context of estate planning, the POA is usually very broad, to allow an agent to handle any kind of matter that may come up.

Each estate planning document authorizes a person to handle some aspect of personal business on your behalf. In the Will, the executor is authorized to distribute assets and handle personal business after your death. In the Health Care Proxy, the agent is authorized to make medical decisions for you if you're unable to do so for yourself. And in the POA, the agent is authorized to transact personal business whenever it may be helpful to you.

The POA is very important in cases of illness or hospitalization, especially if you're incapacitated for any length of time. A serious injury or surgery may disable you for a long time, and may also create legal and financial circumstances that require prompt attention. That's what your POA agent can do. Long-term dementia is perhaps the most compelling example of this.

Note particularly that once a person has lost mental capacity, they cannot sign a POA, so signing one when you are well is an important safeguard for when you're not well.

The POA may be also useful in other circumstances. If, for example, you are heavily burdened caring for a loved one, it may be of use to you to have someone else handle things for you, especially if you are far away from home, or unable to get to the place where the action is required. Similar conditions could arise if you are quarantined in a pandemic, detained in the course of travel, or incarcerated.

Actually, no. It is possible to write a POA that way, but this is not our standard or recommended practice. We normally create POAs to be effective immediately when signed. This is why:

To determine when a condition of incapacity has arisen -- and when it has ended -- can be a complicated matter. Minimally, it would require at least one medical evaluation, which then would have to be documented in a legally actionable manner.

One of the uses of the POA is to enable prompt action in a crisis; a requirement of incapacity would have the opposite effect, slowing things down and burdening the agent with additional obligations. Moreover, the addition of further legal and medical documents to the mix would make it more difficult to achieve the desired action -- e.g., a bank would have to review not only the POA itself but also the medical documentation, and then might raise questions about whether the medical condition has changed since the documents were signed.

Your agent is a fiduciary who is legally obligated to use the POA only for your best interest. Any inappropriate movement of your assets would be a criminal offense.

More deeply, you should only name someone as an agent who you fully trust to act strictly in your best interest.

It is also possible to designate a monitor, to whom the agent would have to report all transactions. This cannot prevent wrongdoing, but it can enhance the legal recourse in the event of any wrongdoing. Again, the strongest safeguard is to name agents who are fundamentally trustworthy.