Estate planning is vital in preparing for unforeseen circumstances that may take away your capacity to enact specific resolutions. When diagnosed with a terminal illness or face the brink of death, many individuals dedicate their time and energies to consolidating trust and writing wills. In the whole process, they overlook an essential aspect, the Power of Attorney (POA), which essentially directs financial and healthcare decisions the principal makes. Powers of attorney are usually irrefutable in court; however, you can override them under legal provisions. We delve into who can override the POA, how-to, and the rights and limitations you should know beforehand.
What Is a Power Of Attorney?
A power of attorney is a legal authorization that appoints a person (attorney in fact or agent) to enact financial, legal, and healthcare decisions if the principal cannot make them due to incapacitation, inability to sign documents, or death. POAs offer limited or complete authority to the attorney-in-fact to make decisions on behalf of the principal. A power of attorney is a crucial requirement in estate planning.
Note: The power of attorney does not limit you to appointing your attorney as your agent. You can nominate close family members or even a work colleague as your attorney-in-fact through a POA.
The legal authorization is not limited to financial and healthcare decisions as POA caters to administrative tasks like signing legal documents. The appointee can also file tax returns and manage the principal’s investments.
What A Power Of Attorney Can’t Do
In varying degrees of authority, a power of attorney proffers power to the attorney-in-fact to carry out financial, health, End of life wishes, and administrative tasks decision on behalf of the principal. The fundamental rule regulating agents enacting decisions is that their choices must portray the principal’s best interests. However, there are limitations to what the POA can do regarding the principal’s power delegation regardless of POA type. Such restrictions are:
- An attorney-in-fact cannot change the principal’s will.
- The agent cannot vote on behalf of the principal.
- The appointee cannot decline the end-of-life wishes for their principal.
- An attorney-in-fact cannot override or transfer the POA to another person.
- The agent will not continue to make decisions for the principal after the principal’s demise unless the client names them the executor in the will.
Other limitations are tied to the type of POA. If an attorney-in-fact contravenes the POA regulations, the court can invalidate a power of attorney.
Tip: When appointing a POA agent, be proactive and do your background checks for the intended appointee. Liaise with your attorney to deliberate the best options and come up with a conclusion. It is advisable to seek a lawyer specializing in estate planning for matters about POA.
Types of Powers Of Attorney
Understanding the different types of power of attorney is pivotal in estate planning. Every kind of POA grants differing rights with limitations to the attorney-in-fact. Conversely, they have different usability timeframes. The most common types are:
- Durable Power Of Attorney retains its effect after the principal becomes incapacitated. All POAs are assumed durable unless you explicitly state the type of POA.
- General Power of Attorney confers broad authority to the attorney-in-fact over your decisions. With a general POA, the agent can open bank accounts, buy and sell real estate, among other financial and healthcare decisions. However, the general POA becomes invalid when the principal becomes incapacitated or dies.
- Springing Power Of Attorney is a special kind of durable POA. A springing POA takes effect when a specific condition is met, usually incapacitation at a later date, unlike other POAs that take effect immediately after you sign them.
- Limited Power Of Attorney allows your attorney-in-fact to perform specific actions, albeit restricted by local law or matters of grave nature. Limited POAs can be durable or non-durable, depending on which you specify upon signing.
- Medical Power Of Attorney appoints a health proxy to make decisions regarding your health care. Such choices include resuscitation, palliative care, life’s prolonging measures, and end-of-life wishes. A medical POA limits your agent to enacting medical decisions only.
Note: For all types of powers of attorney, they lapse when the court invalidates it, the principal dies, or divorces the spouse who was the attorney-in-fact. Also, if the agent can no longer undertake duties and make decisions on behalf of the client, then the POA no longer stands. The only exception is a lasting power of attorney with no expiration date.
Why Override a Power of Attorney?
A principal can override power of attorney at any moment if they regain the capacity to handle financial, health, and tax decisions or deems the attorney-in-fact does not represent their best interest. The agent may misappropriate funds, make bad investments, or make bad legal decisions. However, if the principal is incapacitated or dead, there are two legal provisions for overriding power of attorney.
The first provision is on the grounds of negligence or abuse of rights by the agent. In such cases, the family can dispute a power of attorney and provide evidence of the agent’s acting outside the legal purviews of the POA.
The second provision is that the document is invalid. The court will determine if the POA is legally filled in line with state laws before invalidating or upholding it.
Overriding a POA in court is costly. The principal can overrule the POA by word of mouth; however, it is best to write revokes on the POA and file it with your attorney for official purposes.
How to Override a Power of Attorney
To override a POA, you can request the principal if they can override it. However, if they are incapacitated or refuse to revoke the POA, you may proceed to speak with the agent. If the agent agrees, the court will appoint adult guardians or move the POA to the alternate POA if they are in the original POA.
If both options fail, go to court and prepare your evidence. You will need to convince the judge that the attorney-in-fact contravenes or abuses the POA or is acting in interests not suitable to the principal’s wishes. The court will appoint a caretaker if they mandate an override in such cases.
Power of Attorney: Rights and Limitations
Certain rights and limitations dictate how your attorney-in-fact will use the POA. The rights include:
- Filing your tax returns
- Open a lawsuit
- Complete financial transactions
- Make investment decisions on behalf of the client
- Purchase life insurance
- The limitations state the agent cannot:
- Make decisions after your demise
- Go into marriage for you
- Alter or override your will
- Act against your best interests
- Transfer the POA
- Use the principal’s assets
There are positives and negatives to issuing a POA. However, appointing an attorney-in-fact to enact financial, healthcare, and tax decisions on your behalf prepares you for unfortunate circumstances. Importantly note that you will still have to maintain control of your life and not sign your life away. You can revoke the POA at any time, or your beneficiaries can use legal channels to override it.