Things You Can and Can't Do With Power of Attorney

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Like most legal undertakings, setting up and enforcing power of attorney (POA) documents can be a confusing process. Yet, these essential tools can help aging adults and their families gain peace of mind regarding future care. Geriatric care manager, Buckley Fricker, JD, explains what powers and limitations POA documents can give.

The Two Types of POA

POA documents allow a person (the principal) to decide in advance whom they trust and want to act on their behalf if they become incapable of making decisions for themselves. The person who acts on behalf of the principal is called the agent.

From there, it is important to distinguish between the two main types of POA: medical and financial.

A medical POA (also known as healthcare POA) gives a trustworthy friend or family member (the agent) the ability to make decisions about the care the principal receives if they are incapacitated. A financial POA gives an agent the ability to make financial decisions on behalf of the principal. It is common to appoint one person to act as an agent for both financial and healthcare decisions, but in some cases it may be wise to separate the two.

What Can a POA Do?

The powers of an appointed agent can be broad or narrow, depending on how the POA document is written. Here are a few examples of the kinds of decisions each type of POA can make.

A healthcare agent can decide:

  • What medical care the principal receives, including hospital care, surgery, psychiatric treatment, home health care, etc. (These choices are dependent on the financial means of the principal and the approval of their financial agent.)
  • Which doctors and care providers the principal uses.
  • Where the principal lives. This includes decisions regarding residential long-term care, such as assisted living, memory care, and nursing homes. Again, the principal must be able to afford their living arrangements and the financial POA must approve these costs.
  • What the principal eats.
  • Who bathes the principal.

A financial agent can:

  • Access the principal’s financial accounts to pay for health care, housing needs and other bills.
  • File taxes on behalf of the principal.
  • Make investment decisions on behalf of the principal.
  • Collect the principal’s debts.
  • Manage the principal’s property.
  • Apply for public benefits for the principal, such as Medicaid, veterans benefits, etc.

What Can’t a POA Do?

A generic POA document that does not contain any limitations typically gives an agent broad power over medical or financial decisions. However, there are still a few things that an agent cannot do. One of the fundamental rules governing an agent’s power is that they are expected to act in their principals’ best interest.

An agent cannot:

  • Change a principal’s will.
  • Break their fiduciary duty to act in the principal’s best interest.
  • Make decisions on behalf of the principal after their death. (Unless the principal has also named the agent as the executor of their will or the principal dies without a will and the agent then petitions to become administrator of their estate.)
  • Change or transfer POA to someone else. An agent has the right to decline their appointment at any time. However, unless the principal named a co-agent or alternate agent in the same POA document or is still competent to appoint someone else to act on their behalf, an agent cannot choose who takes over their duties.

The Uniform POA Act

Each state has statutes that govern how power of attorney documents are written and interpreted. This can be very confusing when a principal decides what powers to give to their agent and an agent tries to determine what actions are legally within their power.

For this reason, twenty-five states have adopted the Uniform Power of Attorney Act (UPOAA). Created in 2006 by the Uniform Law Commission, this law aims to create universal default rules for POA contracts across states. It determines which powers are included in the document by default, and which must be explicitly addressed in order to be bestowed on an agent.

Among other things, the UPOAA mandates that:

  • A POA is valid and durable as soon as it’s signed. According to Fricker, this provision is important because it gives a principal the flexibility to decide how involved they want their agent to be while they are still in possession of their faculties. For example, a financial agent could handle the day-to-day tasks of paying bills and buying food, while the principal continues to make their own investment and major purchasing decisions.
  • Compensation for decision-makers, gift-giving, and any beneficiary changes must be specifically outlined in the POA document. One common question people have about POA documents is whether an agent is allowed to receive compensation for making decisions on behalf of a loved one. Fricker says that any compensation must be clearly outlined in the document before it is executed for it to be legal. She advises older adults who are considering appointing someone as their agent to think about including a provision that allows that person to be paid for their services. “Offering to pay a chosen POA is a way to incentivize them to take the extra time and care necessary to literally manage another human being’s affairs,” she says. The time and effort that an agent must invest to make decisions for another person can easily overshadow an agent’s own responsibilities and affairs.
  • Third parties, such as banks, doctors and other family members, cannot be held accountable for upholding the decisions of an agent with a POA document that appears to be legitimate.
  • A POA designation ends upon the death of the principal.

According to the Uniform Law Commission, as of 2018, a total of 25 states have enacted the Uniform Power of Attorney Act, including Alabama, Arkansas, Colorado, Connecticut, Hawaii, Idaho, Iowa, Maine, Maryland, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Pennsylvania, South Carolina, Texas, Utah, Virginia, Washington, West Virginia, Wisconsin and Wyoming.

Because all 50 states have not yet enacted this precedent for POA documents, it is always best to err on the side of caution. A reputable elder law attorney can discuss your desires and concerns and devise POA documents that clearly explain the extent of power you want your agent(s) to have and any limitations they must abide by.

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151 Comments

So many systems here in the land of the free are broken and twisted. Unless we have money to litigate (pay our own attorney) we are helpless.
Even if you have some money to afford to litigate it doesn't solve the problem. My elder care lawyer says that unless you can provide proof of financial abuse or mistreatment, you can't raise a litigation issue. Problem is, you can't prove financial abuse if you don't have access to any financial records. And you can't raise an issue of mistreatment if an aide is taking care of your parent and not mistreating him/her. You basically have to wait for something bad to happen and then move into challenge a POA for guardianship. As far as the finances, you can audit them down the road and litigate to get money if there's anything left. It seems to me that in these situations that the first one to the POA wins...which is usually the evil sibling. Because who, of sound mind, thinks about rushing to a POA at the beginning stages of a parent with dementia? You're just stunned about what's happening and trying to figure out the situation from a medical point of view.
Your granpa must have given his wife POA at one time. As long as he is of sound mind, he can revoke the POA, and give you POA in the same visit. Ours had to be filed at the courthouse before the bank would accept it, but that was it. Alot of people confuse POA with "guardianship". A person who is incompetent to handle their own affairs can be appointed a guardian to make decisions for them. A POA simply grants a person the authority to act in the persons best interest, as they would do for themselves if they were able. Someone will come along who knows more than I do about these things, but that is how I understand it