The Power of Attorney

Let's visit an old friend, the power of attorney

by John P. Koscianski, Attorney at Law

The Power of Attorney (POA) has been an important part of Estate Planning for a long time. Its place in the orderly administration of one’s affairs cannot be denied. But you have to have the right POA, with properly written powers and authorities, or else it might be ineffective at the time when its usefulness is critical to assist with your affairs. There are two types of POA that are common in Estate Planning: the General Power of Attorney and the Health Care Power of Attorney.

The General POA is used to designate an agent to conduct financial or business affairs when you are unable to do so yourself. When this type of POA is established as part of your Estate Plan it is durable, meaning the POA will remain in effect even if you become incompetent or otherwise incapacitated. The agent will have very broad yet specified authorities to carry out certain acts or transactions on behalf of the principal. This document is the ultimate blank check and the agency it establishes must be done so deliberately and with caution. Persons who have “a stake” in your affairs, such as spouses and adult children, are the usual candidates; siblings or other family might also be considered. But, we may be acting recklessly if we make a friend or neighbor an agent under this powerful document. Accordingly, the General (durable) POA is not for everyone, but if you have persons who are close to you and trustworthy, it is a wonderful tool to avoid Probate Court Guardianship during your lifetime- a POA becomes null and void upon death.

To be an effective tool the POA should be very specific about the powers and authorities granted. A POA that authorizes the agent to conduct “banking transactions” might not be deemed valid at a bank. However, a document that authorizes an agent to “…open and close accounts, make deposits or withdrawals, endorse my name on checks…” will likely be honored. This important detail should extend to all the authorities granted in a POA. But, certain banks may have their own policies with regard to POAs. They may not validate a POA which names co-agents, two people to act together on behalf of the principal. Others are requiring hold harmless language or limitations on liability. After all, the POA is the ultimate blank check.

Unfortunately, the General POA, which we can use to avoid Guardianship proceedings (Probate Court) are not always successful in avoiding Probate. Sometimes there are intra-family disputes, or even inappropriate use of POA when you are incapacitated which causes your agent or other family member to file for Guardianship in the Probate Court. If that happens, you can nominate the person who will be the Guardian appointed by the Probate Court. In fact, in Ohio the person you nominate as your Guardian under a POA no longer has to be a resident of the State of Ohio.

The other type of Power of Attorney deals with your physical being. In Ohio the Health Care POA lets you designate a person to make medical decisions for you when you cannot make them yourself. It is very important for every adult to have a Health Care or Medical POA because there is no telling when we might be in a hospital due to a sudden health calamity. If your condition makes you unable to communicate with your friends or family, and you do not have a Medical POA, no one will be able to inquire about your current status or prognosis and your loved ones may be completely cutoff and totally in the dark about your condition. You see, an agent under the Health Care POA can inquire about your condition and make medical decisions on your behalf when you are unable to make them yourself.

Powers of Attorney are fantastic Estate Planning tools. Properly prepared and used, they will greatly assist you and your family with the administration of your affairs when you need such assistance. We hope POAs are never needed, but to have financial and medical POAs is like owning little insurance policies which will benefit your loved ones with convenience when they need to help you. POAs also allow you to avoid Probate Court during your lifetime, thus saving your Estate court costs and legal fees. But remember- be careful who you nominate as your agent under a financial Power of Attorney. A local Judge once said: “More crime is committed with POAs than Saturday night specials”. Choose your agents after careful thought. If your circumstances readily allow you to nominate an agent under both financial and medical POAs, they are truly a “must have”.

This is for informational purposes only and should not be construed as legal advice. For advice regarding your personal situation, please consult an attorney.

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The Power of Attorney

Let's visit an old friend, the power of attorney

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