A power of attorney often puts your finances and even your health in someone else’s hands, an arrangement that only works with strong safeguards. In this post, we’ll outline clauses and other protections your PoA should always have – no matter how much you trust your agent.
Customizing Your Power of Attorney
First, make sure you’re using a website or provider that lets you tailor the PoA to your needs, as every case is different. Lawdistrict, for example, lets you build a document that includes:
- Your state
- Co-agents
- Springing conditions
- Replacement clauses
- Specific situations
- Extra powers (such as gift-giving)
- Compensation rules
- Successor agents
You can even add custom clauses to the document directly. This level of customization is vital in complex legal situations, especially when time is valuable.
Clarifying Your PoA’s Scope
The biggest safeguard you can add is a clear scope, which sets out exactly what your agent can and cannot do. For example, you may not be comfortable with receiving experimental treatment while incapacitated. You can clarify that your agent must decline this if offered.
It’s ultimately up to you whether this PoA includes healthcare, financial, or both powers. You can even set up two documents – one for someone who’ll look after your health, and one for another trustworthy person who’s more financially savvy.
As outlined above, gifting is a power that you can give to your agent. You may include this while still placing strict limits. For example, you might only let them give certain gifts to certain people, or set a cap that prevents them from exceeding the annual exclusion amount.
Your agent is bound by the rules you set, regardless of their complexity. If they violate these, it’s a breach of fiduciary duty, and the PoA will be revoked.
Durability Clauses
A durable power of attorney stays active when you’re incapacitated. Without adding this clause, you could be leaving your accounts and healthcare up to chance. Choose this option – or add it yourself – to make sure your treatments and transactions line up with your wishes.
However, there are some situations where non-durable PoAs are better. For example, you might simply want to monitor your arrangement and approve every major transaction, even if you trust an agent to handle it.
Springing Clauses
Similarly, some PoAs should only take effect if you’re not able to make your own decisions. You must make this distinction, or your agent could make a major transaction on your behalf without your permission.
In most cases, this is used to keep the power of attorney inactive until its principal is considered incapacitated or incompetent. This could be via a court determination or a doctor’s opinion.
Oversight and Accounting Measures
Your agent should ideally keep records of everything that happens while you’re incapacitated or otherwise not managing your PoA. For example, every penny they spend in your name must be accounted for once you’re back in charge.
In addition to keeping receipts and listing transactions, it also helps to appoint someone else for your agent to report to. You might choose your agent more because they’re good with finances than because you trust them above all else. You can then appoint someone closer to you to act as a manager of sorts.
Agents without oversight could:
- Accidentally overspend
- Make transfers in their own interest, not yours
- Hide financial misconduct
- Go against your wishes
- Choose untested treatments
Simple accounting processes make sure your agent stays within their limits.
Appointing Co-Agents
Another common tactic that ensures accountability is to appoint two (or more) agents. You could divide the responsibilities between them, or require a consensus on any action they take. It also helps the agent(s) stay focused on your preferences, even through difficult decisions.
For example, you might worry that a family member would struggle to shut off your life support if it came to it. Spreading the weight of this decision across two people can help – it might even be what ensures your wishes are ultimately respected.
And, of course, multiple agents act as checks and balances to the other (or others). They’ll keep an eye on one another and prevent misuse.
Successor Agents
Similarly, there’s the risk of an agent (or co-agent) dying or otherwise vetoing their responsibility when faced with an active PoA. Make sure you appoint a successor just in case. Otherwise, you could be left with an unsupervised co-agent or no agent whatsoever.
Revocation or Replacement
It’s worth explaining in your PoA how it can be revoked or replaced. For example, you may give a clause stating that it will be automatically revoked if an agent breaches their fiduciary duty. It’s also good to note that any newer documents automatically supersede the current one.
If you have any doubts about your agent, don’t wait until it’s too late. You must trust them to act in your interests, without exception. Co-agents and oversight are best as a cautionary measure, not because you genuinely distrust them.
A power of attorney revocation form lets you simply annul your current PoA. You won’t need the current agent’s permission or signature, though you should notify them in writing (preferably via certified mail to confirm they received it).
Final Thoughts
The right safeguards give you peace of mind about your power of attorney arrangement. This all begins with finding the right custom template. Without this, you might struggle to put together an effective (and legally binding) PoA that clarifies and secures your wishes.
