8 Questions To Ask When Setting Up A Power Of Attorney

Power of attorneyTo follow up on a post from a few weeks ago about durable powers of attorney, I thought I’d get more specific about the range of powers you may or may not wish to grant to your attorney-in-fact (your agent). Since the powers you choose to grant in a power of attorney (POA) can be as limited or as broad as you desire, here are some things to think about when setting up this important document.

1. Do you want your agent to be able to manage and maintain your property, including real estate and personal property?

In order fully exercise his or her powers as your agent, and to be able to make decisions as your alter ego with respect to your property, your attorney-in-fact should have the authority to take possession, sell, and change the form of ownership of certain property (for example, by creating or ending a “joint tenancy,” if that becomes necessary). They should also be able to grant security interests on your property if circumstances make it necessary to obtain a loan on your behalf.

2. Do you want your agent to have the power to sell any vehicle you may own?

By granting this power, you are making it easier for your agent to represent that the vehicle is being transferred free and clear of any liens or other legal obstacles. Simply stated, any potential buyer needs to be satisfied that the sale is on the “up and up,” and that they are not going to be confronted later by some person claiming to be the true owner.

3. Should your attorney-in-fact have access to your bank accounts?

For obvious reasons, banks and other financial institutions do not make it a habit of providing unauthorized people access to their customers’ accounts. Some are even wary of granting such access to agents named in a properly executed power of attorney document; these institutions may in fact require the account holder to provide that authorization using the bank’s own power of attorney form. In either case, whether you need your agent to be able to exercise this authority should be among the considerations when making a POA.

4. Should your agent have access to your safe deposit boxes?

Many of us choose to open safe deposit boxes to store important documents, such as life insurance policies, estate planning documents, and savings bonds. Make sure your document grants your agent the power to access that vault and remove its contents.

5. Do you want your attorney-in-fact to be able to deal with any insurance policies you may own?

Depending on the situation, it may be necessary for your agent to obtain additional insurance coverage on your behalf, modify an existing insurance contract, borrow against the policy, or change beneficiary designations.

6. Should your agent have the power to access your digital accounts and other digital assets?

In this increasingly digital world, it is not uncommon for someone to have online accounts on a host of different internet sites, from sites selling consumer merchandise, like Amazon.com and Target, to social media sites, like Facebook and Twitter. While the law is still evolving in this area and there are important things to consider, it might be a good idea to grant your agent certain powers to deal with these accounts.

7. Should you grant your agent the power to initiate or defend legal actions on your behalf?

Since your agent may be exercising his or her powers as a result of an accident that has left you unconscious or disabled, that very reality may give rise to legal claims – both claims that you might have against another, or claims that another may have against you. That said, a general durable power of attorney should grant your agent such powers.

8. Do you want to authorize your agent to be able to exercise powers with respect to any trust you have created?

As I have described elsewhere, this is an especially important provision to include in your POA under the new Massachusetts Uniform Trust Code. Under the code, an agent is allowed to revoke or amend trust terms and distribute trust property, but only if expressly authorized in both the trust document and power of attorney designation.

Conclusion

This is just a sampling of some of the questions that should be addressed when setting up a power of attorney. If your goal is to provide as much flexibility as possible for your attorney-in-fact in the event you are incapacitated, it is very typical for a durable power of attorney to not only grant the agent all of the powers listed above, but a number of others as well. On the other hand, you may just need your agent to exercise one specific power, and so a limited power of attorney may be all you need.

Contact my office if you are a Massachusetts resident interested in learning more about incorporating a durable power of attorney into your estate plan.