The Ins and Outs of Power of Attorney Rights and Limitations
If you want to make sure you stay within the law while performing your duty as either a principal or an agent of a power of attorney (POA), you need to understand what a POA means for you.
DoNotPay is the expert at demystifying complex legalese—here is our guide to your power of attorney rights and limitations.
A medical power of attorney is governed by strict laws in every state and includes clear definitions of the rights and responsibilities of both parties to the document.
A financial POA is more flexible in the way it can be structured. That’s why it can be more prone to abuse or misinterpretation.
Within the framework of the financial power of attorney, several variants offer different ways to transfer authority over one’s finances:
|Type of POA||Explanation|
|General POA||A general POA usually encompasses all the principal’s financial affairs but terminates when the principal becomes incapacitated|
|Durable POA||This type of POA also transfers full control but remains valid after the principal is no longer capable of making financial decisions|
|Springing POA||If the principal only wants to cede financial control when they become incapacitated, a springing POA comes into effect only when certain defined medical criteria are met|
|Limited or Special POA||A limited POA works by granting power of attorney to the agent for certain tasks or for a fixed time. It terminates automatically when:
Within each of these types of POA, both the principal and the agent have certain rights and responsibilities.
As the instigator of the POA document, you should be in control of which powers you cede. The level of your control depends on the type of POA you are signing, but your rights in all cases include:
- Choosing your agent
- Defining the scope
- Revoking the POA
Your finances are not only the guarantee that you can pay your ongoing bills and stay solvent, but also potentially the inheritance your loved ones deserve.
Your choice of agent should take account of:
- Their probity, trustworthiness, and financial acumen
- Any family feuds or disagreements that might lead to later challenges against a particular agent
- The willingness of your chosen agent to do the job
You—and you alone—should decide which aspects of your financial affairs should be included in your POA. If you want day-to-day expenses taken care of, but your property investments left alone to be divided in your will, you can exclude property transactions from your agent’s scope.
Your preparation and forethought are crucial to ensuring your wishes are met.
You have the right to revoke a POA at any time. If you notice your agent is not doing what you want or is no longer interested in the responsibility, it may be time to look for a different agent.
Your responsibilities could be couched in similar terms to your rights as they encompass:
- Making sure your agent will act in your best interests
- Ensuring you choose an agent who will be able to do the job as long as necessary
- Preparing the scope of the POA carefully
- Being as clear as possible in your expectations of your agent
You should bear in mind that the power is in your hands until you sign it over to someone else via a POA. The more preparation you put into your POA, the more likely your wishes will be respected.
As the designated agent in a power of attorney, you bear a tremendous responsibility to act in the best interests of your principal.
You do have rights—most of which are self-evident—including the right to:
- Refuse to act illegally
- Step down from the role if you feel unwilling or unable to continue in your role for any reason
- Exercise your judgment in making financial decisions within your mandate
Under a POA, you, as the agent, should:
- Manage the principal’s bank accounts and ensure that bills are paid on time
- Ensure that day-to-day needs are provided for
- File taxes on the principal’s behalf
- Make investment decisions in the best interests of the principal
- Run the principal’s debtor’s book
- Make any business decisions the principal requires, if mandated to do so
- Look after the principal’s property interests
As an agent, you are not allowed to:
- Break the law in your principal’s best interests
- Change the principal’s will
- Benefit financially from the agency, unless this is specifically provided for in the POA
- Pass the agency on to a third party
These limitations guarantee that a power of attorney cannot be abused.
Drafting a POA letter is a straightforward process, but its success depends on the preparation the principal puts in.
The steps in setting up a POA are:
|Picking an agent||This step should work based on “willing principal, willing agent,” meaning that both parties should be comfortable with:
|Preparing the POA||The more detailed and complete the body of the POA, the more likely it will achieve the principal’s aims|
|Signing the document||Once a POA is completed, the principal should sign it and have it notarized. In some states, you may require a notary and/or witnesses to validate the POA|
Powers of attorney can be complex, so you may be tempted to engage an expensive lawyer to draft your document. We can save you that hassle and expense—DoNotPay can generate a power of attorney for you in a few clicks!
If you need a power of attorney that covers all the bases and secures your finances, DoNotPay is here to help!
To get your customized POA, all you need to do is:
- Sign up for DoNotPay in your web browser
- Pick the Create a Power of Attorney product
- Fill in the details you want to be included in your document
Once we have everything, your job is done—all you need to do is sign your POA in the presence of a notary. We can even help you schedule a remote appointment—you just need to let us know while completing the short questionnaire.
DoNotPay can help with advice for most states on how to set up your POA—here are a few examples:
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