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Understanding the Power of Attorney (POA)

Understanding the Power of Attorney (POA)

The designation of a power of attorney is a crucial aspect of any succession plan. After all, it allows someone to make medical, financial, and other decisions in your life if you can't. It's important to pick someone you trust for the job and accept responsibility for it.

When considering who to choose, it can be helpful to understand the rights and limitations of a power of attorney. This will help you illustrate exactly what the power of authority can and cannot do, giving you more context when you start planning your wealth succession. Read on to learn more about the following:

How does the power of attorney work?

A power of attorney empowers someone to make important decisions in a situation where you become medically unable to do so. The purpose of formally appointing a power of attorney is to ensure that someone can act on your behalf promptly, if necessary. Without a POA (power of attorney), your family will often have to go to court to appoint a trustee to take care of these obligations.

There are several types of power of attorney, but the nomination process is similar. You can begin with creating a valid will online and then appointing a power of attorney using a standardized state-wide form. A designated power of attorney's job is to put your needs ahead of theirs, so selecting someone you trust is essential. Once signed and authenticated, this documentation will allow your power of attorney to take action if certain conditions are met.

What are the rights of a power of attorney?

A power of attorney, commonly known as an agent, has the right to make important decisions in life on behalf of the person who appointed them, known as the principal. Here are some of the characteristics of a power of attorney:

• The right to make decisions about health care, including diagnosis and the continuation or discontinuation of medical treatment.

  • The right to decide on long-term health care lifestyles.

  • The right to initiate proceedings on behalf of the principal and to sign all necessary legal documents.

  • The right to make financial, business, or personal investment decisions.

  • The right to purchase a life insurance policy for the principal.

  • The right to open bank accounts, issue checks or sell goods on behalf of the principal.

  • The right to receive some form of income on behalf of the principal.

  • The right to select and hire doctors or health professionals.

What are the limits of a power of attorney?

Although a power of attorney has strong legal rights over the management of the principal's business, there are some limitations that you should be aware of. These limitations exist to help regulate the role of power of attorney:

  • A power of attorney cannot use the principal's assets or money as if they were his own.

  • A power of attorney can only be officially appointed if the principal is in good physical and mental shape.

  • A power of attorney cannot accept fees higher than those described in the power of attorney contract.

  • A power of attorney cannot at any time transfer responsibility to another agent.

  • A power of attorney cannot distribute inheritances or transfer assets after the death of the Client.

  • A power of attorney cannot make any legal or financial decisions after the death of the principal, at which point the executor will take over.

  • A power of attorney cannot make decisions before the document comes into effect; the conditions will be described with the approval of the agent and the representative.

  • A power of attorney cannot modify or invalidate your will or any other estate planning document.

  • A power of attorney cannot modify or violate the terms of the application forms; otherwise, they can be held legally responsible for negligence or fraud.

  • A power of attorney may not act outside the best interests of the principal.

Frequently asked questions about the power of attorney's rights

Power of attorney limitations and rights exist to ensure that both parties understand exactly what the document entails. However, some gray areas may require more context to be understood:

Can a power of attorney transfer money to themselves?

A power of attorney can transfer money to himself or herself if it is described in the original contract or when a power of attorney acts in the principal's best interest. Unfortunately, there are situations in which a power of attorney exploits its legal rights by transferring funds beyond those specified to it. In such circumstances, a power of attorney can be revoked, and the director or a family member can take legal action.

There are several ways to ensure that the best interests of the principal are protected at all times. First of all, you must choose someone you trust for the job. Many people choose a spouse, a child, or a sibling. Once you know who you want to select, review your documents with a qualified estate planning lawyer to clarify their responsibilities and boundaries.

For example, if you want only one power of attorney to make medical decisions for you, you can include that in planning. There are several types of powers of attorney to meet different legal, financial, and medical needs. The most vital thing is to understand when each function starts and ends.

Can two people have a power of attorney?

Two or more people can have a power of attorney, although this is generally not recommended. Appointing multiple powers of attorneys can be confusing when it comes to making important decisions, especially when it comes to urgent medical decisions. However, if you want different people to take on different responsibilities, you can appoint a different type of power of attorney.

There is an important exception for naming multiple powers of attorneys. For older couples who wish to choose a spouse, it may be a good idea to appoint a second agent. That way, if something happens to both of you, someone else can step in. It is commonly accepted to name a spouse and a child as a power of attorney.


Power of attorney is an important addition to any succession plan. This person will take care of health care, financial management, and other important decisions if you are unable to do so. Understanding the rights and limitations of a power of attorney can help you clarify expectations throughout this process. 



Dennis Jao
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