Bill Kratt practices in the areas of estate and tax planning, estate administration, asset protection, elder law and guardianship. He is a Board-certified Specialist in Estate Planning & Probate Law by the N.C. State Bar Board of Legal Specialization, and an elected Fellow of the American College of Trust and Estate Counsel.

Few documents raise more questions than the Power of Attorney (“POA”). The most common types are the General POA (financial decisions) and the Health Care POA (medical decisions). Your power of attorney gives your agent the authority to act in your name. The power it gives can be very broad, or very limited. The POA can be effective immediately, or only after certain events occur. A “durable” POA lasts as long as you are living. This article briefly discusses some of the frequent misunderstandings about powers of attorney.

Myth #1 – My agent can do anything that I can do.
The General POA gives broad authority that allows your agent to do almost anything that you could do yourself. However, there are limits on even the broadest language. Your agent is not allowed to sign a new Will, marry or divorce, or vote in an election. Your agent is not allowed to act against your best interest, and so may NOT make gifts from your assets, unless the POA specifically grants that power. Your agent is not permitted to take actions that would change your estate plan. That means that he or she may not change beneficiary designations on accounts or insurance policies, add or remove joint owners from accounts, or take similar actions. Also, your agent has no power to act for you in any appointed or fiduciary capacity. If you own stock in a business, your agent may vote those shares, but not cast your vote as a member of a board, or as an officer in a corporation.

Myth #2 – My spouse can handle everything for me.
No law gives your spouse authority to sign your name simply because you are married. If you co-own an account (not land), your spouse has access that might accomplish the same goal. However, without an appropriate POA, your spouse cannot get or re-finance a mortgage on your property, or make stock trades in your IRA.

Myth #3 – My agent cannot act without my permission.
Your POA is effective immediately upon signing, unless it says that it is triggered by some other event or condition. A common trigger is a doctor’s determination that you are incapacitated. If effective immediately, the agent can act at any time, whether you are capable or not. This can be helpful in some cases, and dangerous in others. Actions of the agent do not require your consent, or even your knowledge. Banks and other institutions are generally allowed to assume that the POA is valid, and that the agent authorized to act for you.

Myth #4 – A Health Care POA and a “living will” are the same.
These two documents are often confused. A health care power grants to your agent the authority to make a broad range of medical decisions. The agent’s decisions will control, and generally cannot be over-ridden by a doctor or hospital. A ‘living will’ grants no authority, but rather states your wishes under certain very specific (usually end-of-life) circumstances. Also called a medical declaration, that document is not binding. Medical providers are authorized, but not required, to follow your wishes.

Myth #5 – If I sign a power of attorney, I give up control.
Signing a POA does not mean that you give up any control, so long as you are able to act yourself. You may amend or revoke the POA at any time, so long as you are able.

Myth #6 – I already signed one (ten years ago) – I’m fine.
Even if you have a valid POA, it should be reviewed every few years. Laws change – North Carolina modified its laws on health care POAs in 2007. Financial POAs typically do not grant health care authority, and vice-versa. Some financial and healthcare institutions will refuse to accept POAs if they are older than their internal policy directs. This refusal may not be legal, and may even open the institution up to claims, but it happens anyway. POAs from other states may be effective in North Carolina, but should be reviewed by your attorney.

Reread your Power of Attorney – you may be surprised what you find!