Founding Attorney
A power of attorney (POA) is an essential document in an estate plan. It grants someone you trust the authority to make decisions on your behalf if you’re unable to do so. Whether it involves managing your finances or making healthcare choices, a well-crafted POA ensures that your wishes are honored. However, mistakes in the document can lead to disputes, misunderstandings, and even financial loss.
This blog will walk you through common pitfalls people encounter when drafting a POA and how to avoid them. By understanding these errors, you can create a more effective and secure plan for your future.
Choosing the Wrong Agent
One of the most critical decisions when preparing a power of attorney is selecting the right agent. Many people make the mistake of choosing someone based on their relationship rather than their qualifications. While it may seem natural to appoint a spouse, child, or close friend, it’s essential to ensure that the person is financially responsible, trustworthy, and capable of making difficult decisions. An agent with poor judgment or a lack of financial understanding could make decisions that do not align with your wishes or best interests.
Additionally, it’s essential to consider whether the person can handle the emotional and logistical challenges of the role. Being an agent requires a level of decisiveness and a willingness to act under pressure. If you appoint the wrong person, they may struggle to fulfill the role effectively, leading to potential legal and financial consequences. Carefully evaluate the suitability of your agent to avoid future complications.
Not Identifying the Agent’s Authority
Another common mistake when drafting a power of attorney is failing to define the agent’s authority clearly. Without specific instructions, your agent may face confusion about what decisions they are allowed to make. This lack of clarity can lead to misunderstandings or disputes among family members and others involved.
To avoid this issue, explicitly outlining the agent’s powers is essential. Consider the following:
- Will your agent have financial, healthcare, or both authority?
- Are there specific limitations on their activities? For instance, you may want to limit their ability to sell property or make large financial transactions.
- How should they handle investments, banking, and other financial matters?
Clear guidelines ensure that your agent can act according to your wishes and prevent overreach or unauthorized actions. A well-defined scope of authority minimizes the risk of disputes and ensures your needs are met precisely.
Failing to Consider Durability
Failing to consider the durability of your power of attorney is another frequent error. A durable power of attorney remains effective even if you become incapacitated, ensuring your agent can continue making decisions on your behalf. Without this provision, your POA may become invalid if you cannot make decisions due to illness or injury.
Consider the following when determining durability:
- Do you want the POA to take effect immediately or only upon incapacitation?
- Should it remain in force if you lose the ability to make decisions?
Addressing these points will ensure your POA is effective when needed most.
Not Updating the POA
Another common mistake is neglecting to update your power of attorney after significant life changes. Divorce, death, new financial circumstances, or relationship changes may render your current agent or instructions outdated. Failing to revise the document regularly could leave someone you no longer trust in charge of important decisions.
Reviewing your POA periodically is essential, especially after significant life events. Keeping the document up to date ensures that the agent you select and the instructions you provide align with your current wishes, protecting your best interests at all times.
Not Consulting an Estate Planning Attorney
Many people make the mistake of preparing a power of attorney without consulting a lawyer. While many templates are available online, these generic forms often lack the customization needed to address your circumstances. Relying on these forms can lead to unintended consequences, including vague language or missed legal requirements.
Consulting an estate planning attorney ensures your power of attorney is tailored to your needs. An attorney can help you avoid pitfalls, clarify the scope of your agent’s authority, and ensure the document is legally sound. Professional guidance provides peace of mind and safeguards your interests.
Protect Your Future with a Well-Drafted Power of Attorney
Avoiding these common mistakes when drafting your power of attorney is essential to safeguarding your future. By carefully choosing the right agent, clearly defining their authority, and keeping the document current, you can ensure your wishes are honored. Don’t leave such an important task to chance—consult Merlino & Gonzalez for informed guidance. Contact us today to schedule a consultation and ensure your estate plan is in good hands.