Duties & Limitations of a Power of Attorney

When you want to give someone else the power to make legal, financial or medical decisions when you're otherwise unable, you can use a power of attorney document to designate that person to handle certain tasks for you. Depending on the arrangement, power of attorney duties can range from managing your bills and financial accounts to making medical care decisions and completing real estate transactions on your behalf. Limitations of the role relate to its expiration or cancellation, transfer of powers and the legal responsibilities the designated person must uphold.

Basics of a POA

The person to whom you give the POA in the legal document is called the agent, while you're known as the principal. Your POA document may specify that the arrangement has a specific starting and expiration date, or it may note the authority persists even if you become incapacitated, which is known as a durable POA. But in any case, the arrangement will expire upon your death if no expiration date was otherwise included.

There are various types of power of attorney arrangements you might consider for your needs. A general POA authorizes someone to handle financial and legal tasks like selling property, handling insurance claims and paying your bills, while a special POA has limited duties that you specifically designate. You might consider a healthcare POA to make decisions regarding medical treatment when you're in a coma, mentally incapacitated or otherwise unable to represent your desires. There's also a financial POA that would take care of most of your financial matters.

Duties of a POA

The main duty of a POA is to make decisions that are within your best interest when you're unable to make them yourself. However, the specific duties of a POA vary depending on the type of arrangement, and duties often overlap among POA types.

  • General POA: Duties for this POA might include handing your estate and finances, but they usually aren't specified in the document and thus can encompass other areas like health. Examples include completing real estate transactions, managing any investments you have, maintaining your bank accounts, paying bills, paying insurance premiums, handling your taxes, deciding medical options and doing any required business transactions.
  • Limited POA: This type of POA lets you designate someone to handle specific tasks, usually for a limited time or purpose. For example, if you're out of the country and need someone to handle the sale of your property back home, a limited POA could manage the real estate, work with the real estate agent and complete the home sale process. If you're very sick, you might use a limited POA to help make medical decisions for you regarding treatment options, healthcare facilities and doctors.
  • Financial POA: This POA type gives your agent authority to handle broad financial management tasks. Duties can include paying your mortgage and other debts, handling Medicaid applications, filing your income taxes, selling property and managing your financial portfolio. Thus, these duties overlap those of a general POA.
  • Medical POA: Either temporarily or until your death, a medical POA can hire medical and personal care professionals, choose medical procedures and tests, select healthcare and nursing facilities and ensure you get the proper care.

POA Limitations and Risks

When you give someone the POA, there are important limitations to the power the agent has. First, your agent must make decisions within the terms of the legal document and can't make decisions that break the agreement, and the agent can be held liable for any fraud or negligence. The agent also can't make changes to your will or hand over the control to another person who you haven't designated in the POA document.

Since the POA is no longer valid when you pass away, the agent loses the control at that time. The exception is if your will designated the person or if the person otherwise gets the authority from the state to handle your estate.

When selecting an agent, you should also consider the risks involved and decide if you need to limit the power of attorney for your situation. When you give someone control over your finances, for example, there's no guarantee the person won't sell your property for an undesirable price or make poor investment decisions. When you're ill, your agent may not choose the medical facility or care you would have preferred. Also, your agent can end the arrangement at any point if they no longer want the responsibility.

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