It’s important to be aware of some common myths about powers of attorney that often confuse or needlessly complicate the estate planning process. Using powers of attorney wisely, drafting them properly, and ensuring that they are made to match your individual needs is one thing, but you might need to get past some common myths to make sure you can get the most out of these vital tools. Today we’re going to take a look at a couple of common myths about powers of attorney and why they are not true.
Myth #1: A Power of Attorney Is All I Need For a Good Estate Plan
While powers of attorney are useful and important estate planning tools, they are not the only estate planning tools around, nor are they the only tools you will need for a comprehensive plan of your own. Powers of attorney offer you specific abilities that other tools do not provide, but they don’t do everything. As one example, powers of attorney are useless when it comes time to distribute your estate after you die. All powers of attorney you create terminate upon your death, and you cannot use them as the primary way through which you distribute your estate property.
Myth #2: I Shouldn’t Make Any Powers of Attorney Since They Are Too Easily Misused
Powers of attorney allow you the ability to select someone else who will have the legal authority to make choices for you. Your agent under a power of attorney can make almost any decision you grant them the power to make. As long as your power of attorney document is properly drafted, your chosen agent or agents receive decision-making authority without any kind of court approval. In fact, if your power of attorney document provides for “immediate” power, your agent can begin representing your interests as soon as the document is executed. Note: some power of attorney documents provide for “springing” powers, meaning your designated agent’s ability to act for you springs into effect when you are determined to be incapacitated.
Many people are hesitant to grant this kind of power to someone else because they believe that their chosen agent might misuse the authority given to them. While this is always a possibility, powers of attorney do not come without strings. When an agent agrees to serve under a power of attorney, that agent also agrees to take on a heightened legal obligation to the person making the power of attorney.
This heightened legal obligation, known as a fiduciary duty, means that the agent cannot simply do whatever he or she wants with the authority granted to them. If the agent should misuse his or her authority, that agent faces potential legal consequences that can be quite serious. In some situations the misuse of power of attorney can even lead to criminal charges.
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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