18/10/2019 0 Comments
3 Common Misconceptions about a Power of Attorney
A power of attorney (POA) is a legal document that gives another person or persons, the authority to make decisions for you if you are unable to do so through illness or absenteeism. The person you select to make these decisions on your behalf is called the "attorney" and you are referred to as the "donor".
Selecting a suitable power of attorney is a very important task. But despite this, there is a great deal of misunderstanding surrounding POA documents. In this post, we discuss the most common POA misconceptions so that you can be fully informed when choosing your attorney.
There is Only One Type of Power of Attorney
There are actually two different kinds of Power of Attorney.
1. An Ordinary Power of Attorney is a legal agreement authorising the attorney to manage your monetary affairs. An ordinary POA is usually set up for a short term duration, for instance, you require somebody to act for you you're on holidays, or for only when you are able to monitor their actions.
2. An Enduring Power of Attorney places legal authority with the attorney to make future choices on your behalf if you do not have the mental capability to do so. An Enduring POA can be set up to help manage your finances or to make decisions about your healthcare.
The Power of Attorney Can Do Whatever They Want
Whether you have set up an Ordinary Power of Attorney or an Enduring Power of Attorney the attorney is bound by a "Fiduciary Obligation". This means that the attorney must always act in the donor's best interest and prevents them from making decisions that will take advantage of you. This fiduciary obligation may not necessarily be outlined in the POA document but it is still legally binding.
In most situations, the attorney is simply carrying out your pre-determined wishes because you are unable to do, and these wishes can even be outlined in the POA document. Even so, it is still highly recommended that you choose somebody you trust to act as your Power of Attorney.
A Power of Attorney Will Survive Death
An Ordinary Power of Attorney ends the moment the donor becomes incapacitated. As ordinary POAs are set up with certain conditions, all decision making powers of the attorney cease if the donor becomes mentally incapacitated.
An Enduring Power of Attorney does not cease when the donor becomes ill or mentally incapacitated. Instead, the power lasts up until the death of the donor. The attorney will have no decision making powers once the donor dies.
The last will and testament will identify the person responsible for handling the deceased's estate, and it is this person only who has any decision making powers.