Your Power of Attorney: Pitfalls to Avoid
Written by Jim Worthington on August 21, 2020
I don’t want my POA to be effective immediately. Can I wait until my doctor says I need it?
You may think you want to condition your agent’s authority on a medical professional saying you are incapacitated, which means you are unable to manage your property or business affairs. KRS 457.020(5); N.C.G.S. § 32C-1-102(6). That’s called a springing power of attorney. Unfortunately, for liability reasons, medical professionals are often reluctant to make that determination in writing. If they were to decline, your family would have to go to court. The court would have to appoint a three-person team, including a psychiatrist, a psychologist, and a social worker, to evaluate you and give their opinion. The county attorney would prosecute the case in a trial that would include testimony by the social worker and would probably be in front of a six-person jury. The court would have to appoint a lawyer for you. You or your family would have to pay for the medical professionals, the attorney, and the court costs. Even if everyone agreed you were incapacitated, all of this would have to take place, as no settlements out of court are permitted in this kind of proceeding.
If the jury determined that you were incapacitated, the court would appoint a guardian. The guardian would have to file with the court:
- an inventory of your assets,
- a plan for your care, and
- annual reports of your income and expenses.
This whole process is unpleasant, expensive, and time consuming. Avoiding it is the main reason for having a power of attorney. Insisting on a springing power of attorney defeats the control and certainty that a POA provides. The springing POA’s effectiveness becomes dependent on something outside your control—a medical professional risking their own liability to say you are incapacitated. Making your POA immediately effective gives you certainty about when and how your affairs will be managed and avoids the unpleasantness of a formal court proceeding.
I can’t decide who to name as my Agent. Can I name two people?
You can, but please don’t. Naming co-agents can cause problems. It might be just the inconvenience of their having to coordinate getting together to do otherwise simple things like going to the bank to sign paperwork. It could, however, be more serious, like their inability to agree on a course of action. If your co-agents couldn’t agree, you effectively wouldn’t have a power of attorney. Again, the main point of having a power of attorney is to have control and certainty about how your affairs will be managed.
OK, you’ve convinced me that I shouldn’t name co-agents. But I don’t want one person to be stuck doing all the work. Can I name two agents to act independently of each other?
That may work. In fact, co-agents having simultaneous, independent power to act is what the law provides when you name more than one agent. KRS 457.110(1); N.C.G.S. § 32C-1-111(a). But if you are happy with two people acting independently, I think you would be better off naming one of them as the primary agent and the other as the successor agent. This works well for almost all of my clients. If the job were to become too much for the first person, the second person could take over.