Power of Attorney

Garrett T. Smith


A power of attorney is an important document in your estate plan. You want to make sure it is written in a way that prevents unintended negative consequences. A power of attorney gives another person the ability to act on your behalf for specified legal and financial matters. Depending on how it is written, a person may be given immediate power to act on your behalf or reserved power to act on your behalf that must be triggered by your incapacity. A power of attorney requiring a triggering event is called a springing power of attorney and is what I suggest in most cases. Many powers of attorney give immediate power. Even though this may be a more convenient option, it can cause multiple problems.

A few years ago, I had a client relate the following story to me as we were discussing how she and her husband wanted to draft their powers of attorney. The story was so extreme that I almost always think of it when I discuss or even think about drafting a power of attorney. My client’s father had served in the military and was provided a power of attorney before shipping out for active duty in Afghanistan. The military provides all of their soldiers with a basic will and power of attorney; however, it is rarely customized to meet specific needs. One of her father’s military companions (who I will call Joe) shipped out at the same time as my client’s father, and they became fast friends. Joe had completed a similar basic power of attorney before deployment as well. When Joe had finished his military assignment, he returned home, excited to be reunited with his family. Joe’s wife and children met him at the airport; however, the highly anticipated reunion was soured by unexpected events. During Joe’s deployment, his wife had sold all of his guns and other personal belongings, his car, and their house. She served him with divorce papers right at the airport! Joe’s wife had been given immediate powers when he signed his power of attorney. Many of Joe’s wife’s actions could have been avoided had he used a springing power of attorney.

Other more common issues associated with an immediate power of attorney occur when a spouse passes away and the alternate agent is now able to act for the surviving spouse. The alternate agent could take out a HELOC on the surviving spouse’s home or encumber it in some other way. The alternate agent would also have access to the surviving spouse’s bank accounts. The alternate agent can act for the surviving spouse in any way allowed by the power of attorney. They are liable for violating their fiduciary duties, however, the alternate agent is usually a child and almost no parent wants to sue their own child. It is always safer to have a springing power of attorney.

If you need a power of attorney or would like me to review your current power of attorney, please give me a call!

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