• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
  • Home
  • BLOG
  • Newsletters
  • Reviews
    • Our Reviews
    • Review Us
  • Videos
  • Contact Us
  • WhoWe Are
    • A Message From Mark Costley
    • Meet Our Team
    • Communities We Serve
  • WhatWe Do
    • Advanced Estate Planning
      • Asset Protection
      • Business Succession Planning
      • Charitable Giving
      • Family Foundation
      • Family Limited Partnerships
      • Grantor Retained Annuity Trust
      • Irrevocable Life Insurance Trust
      • Planning For Charitable Gifts
    • Counseling Non-Profits
    • Elder Law and Special Needs Planning
    • Estate and Gift Tax Planning
    • Estate Planning
    • Probate & Trust Administration
    • Process
    • SECURE Act
    • Social Entrepreneurship & Business Law
  • WhyWe Do It
    • Peace Of Mind
  • Resources
    • Caregiving Resources
      • Caregiving Worksheets
      • Our Book
    • Definitions
    • Elder Law Reports
    • Estate Planning Resources
      • Estate Planning Articles
      • Estate Plan Checkup
      • Estate Planning Reports
      • Is Your Estate Plan Outdated?
      • Top 10 Estate Planning Techniques
    • Frequently Asked Questions
      • Elder Law
      • Estate Planning
      • Estate Planning for Parents
      • FAQs for Families Without an Estate Plan
      • Divorce and Your Estate Plan
      • Estate Planning for Women
      • Estate Planning 101
      • Legacy Wealth Planning
      • LGBTQ Estate Planning
      • Nursing Home Planning
      • Spliter
        • Philanthropy and Your Estate Plan
        • Planning for Dementia
        • Probate
        • Serving as Executor
        • Special Needs Planning
        • Tax Avoidance Planning
        • Trust Administration & Probate
        • Understanding the Social Security Retirement System
        • Will Contests
    • Pre Consultation Form
    • Probate Resources
      • Chapel Hill Probate
      • Raleigh Probate
    • Professional Resources

Clarity Legal Group

Estate Planning Information Center

919-484-0012 Schedule Consultation
Attend a Free Seminar
  • WhoWe Are
    • A Message From Mark Costley
    • Meet Our Team
    • Communities We Serve
  • WhatWe Do
    • Advanced Estate Planning
      • Asset Protection
      • Business Succession Planning
      • Charitable Giving
      • Family Foundation
      • Family Limited Partnerships
      • Grantor Retained Annuity Trust
      • Irrevocable Life Insurance Trust
      • Planning For Charitable Gifts
    • Counseling Non-Profits
    • Elder Law and Special Needs Planning
    • Estate and Gift Tax Planning
    • Estate Planning
    • Probate & Trust Administration
    • Process
    • SECURE Act
    • Social Entrepreneurship & Business Law
  • WhyWe Do It
    • Peace Of Mind
  • Resources
    • Caregiving Resources
      • Caregiving Worksheets
      • Our Book
    • Definitions
    • Elder Law Reports
    • Estate Planning Resources
      • Estate Planning Articles
      • Estate Plan Checkup
      • Estate Planning Reports
      • Is Your Estate Plan Outdated?
      • Top 10 Estate Planning Techniques
    • Frequently Asked Questions
      • Elder Law
      • Estate Planning
      • Estate Planning for Parents
      • FAQs for Families Without an Estate Plan
      • Divorce and Your Estate Plan
      • Estate Planning for Women
      • Estate Planning 101
      • Legacy Wealth Planning
      • LGBTQ Estate Planning
      • Nursing Home Planning
      • Spliter
        • Philanthropy and Your Estate Plan
        • Planning for Dementia
        • Probate
        • Serving as Executor
        • Special Needs Planning
        • Tax Avoidance Planning
        • Trust Administration & Probate
        • Understanding the Social Security Retirement System
        • Will Contests
    • Pre Consultation Form
    • Probate Resources
      • Chapel Hill Probate
      • Raleigh Probate
    • Professional Resources
Home » BLOG » Estate Planning » 5 Power of Attorney Mistakes to Avoid

5 Power of Attorney Mistakes to Avoid

Power of Attorney Estate planning typically involves a number of tools and strategies, each aimed at achieving a different goal within the larger plan. One of the most commonly used estate planning tools is a Power of Attorney. When used properly, a Power of Attorney can accomplished, or help to accomplish several different immediate and long-term estate planning objectives; however, when used improperly, or when used by someone who doesn’t fully understand the power granted in the document, a Power of Attorney can do more harm than good. If you are considering executing a Power of Attorney in the near future, or you have been appointed as an Agent under a Power of Attorney executed by someone else, you should carefully read through the following “ 5 Power of Attorney Mistakes to Avoid. ”

A Power of Attorney, or POA, is a legal agreement that allows the “Principal” (the person executing the document) to grant authority to an “Agent” (the person receiving the powers granted) to act on the Principal’s behalf in legal matters. The extent of the authority granted, and the duration of the authority granted, depends on the type of POA executed by the Principal. As is the case with any type of legal document, it is always best to have an experienced estate planning attorney draft or review a POA in which you are a party; however, you should also beware of making the following five common mistakes:

  • Granting too much, or too little, authority – there are two basic types of POAs – a “general” POA and a “limited” or “special” POA. A general POA gives your Agent almost unlimited authority to act on your behalf. This means the Agent can likely do things such as withdraw funds from your financial accounts, sell your property, and even enter into contracts in your name. A limited or special POA only grants the Agent the authority specified in the POA agreement. For example, if you want to give someone the authority to act on your behalf during the sale of a vehicle while you are out of town you would execute a limited POA and specify that the Agent is only to have that authority. General POA confers a considerable amount of power and should only be used when granting power to someone you trust implicitly, such as a spouse or adult child. Granting too much power can have tragic consequences if the Agent abuses that power. Conversely, granting too little power can make the POA effectively worthless if your Agent cannot accomplish what you wish him/her to be able to accomplish.
  • Failing to understand “durability” – traditionally, a POA automatically terminated with the death or incapacity of the Principal; however, incapacity planning is often precisely why a POA is needed. To resolve this dilemma the concept of “durability” evolved. When a POA is “durable” it means the Agent’s power will survive the incapacity of the Principal. Some states consider a durable POA to be the default type, meaning you must specifically say you don’t want it to be durable while other states require you to specifically make a POA durable by using the word in the document. Make sure you understand the difference and what your state requires to make a POA durable.
  • Failing to update or revoke a POA – spouses frequently give each other general POA because it can make life easier. That authority, however, can survive a divorce and will survive a separation. If you separate from your spouse or initiate divorce proceedings make sure you revoke a POA. The same applies if you gave a business partner POA for your business dealings and you ended the partnership or enter into a new partnership with someone else. Any time the dynamic between a Principal and an Agent change it is time to review the POA.
  • Naming the wrong Agent – probably the most common of all mistakes is naming the wrong Agent. Remember that your Agent will be acting on your behalf in potentially important legal and financial matters. Do not name someone just because he/she is your spouse/best friend/child. Name the person who is best suited for the job.
  • Allowing someone else to create the document (other than your attorney) – hospitals, long-term care facilities, real estate agents, and a wide variety of other people may ask you to execute a POA for an endless number of reasons. Some of those reasons are legitimate; however, some are not. A single word in any legal document can change the meaning of the document which is why you should never agree to sign a POA (or any other legal document) without first having your estate planning attorney review the document.

If you have additional questions or concerns about creating or using a Power of Attorney, contact the experienced North Carolina estate planning attorneys at Clarity Legal Group® by calling (919) 484-0012 to schedule an appointment.

 

 

  • Author
  • Recent Posts
Mark Costley
Mark Costley
With more than 30 years’ experience in private practice, Mark Costley has helped hundreds of North Carolinians with estate planning, living trusts, financial law, probate, and trust administration. Mark’s work involves elements of teaching, strategic analysis and planning, documentation, and assisting clients in implementing their plans. He is devoted to providing the best in planning, efficiency, administration, and asset protection.
Mark Costley
Latest posts by Mark Costley (see all)
  • What Are the Drawbacks to Creating an ABLE Account? - May 15, 2023
  • What Is an ABLE Account? - May 5, 2023
  • What Is the Medicaid “Look-Back” Provision? - March 6, 2023

Date: January 26, 2016 Category: Estate Planning

Leave a Reply

Your email address will not be published. Required fields are marked *

Clarity Legal Group

Subscribe to Our Blog

Join the Clarity Legal Group® community by subscribing to our blogs addressing estate planning, elder law, asset protection, healthcare planning, special needs planning, charitable giving and more.

  • This field is for validation purposes and should be left unchanged.

Free Estate planning Worksheet

There's a lot that goes into setting up a comprehensive estate plan, but with our FREE worksheet, you'll be one step closer to getting yourself and your family on the path to a secure and happy future.

  • This field is for validation purposes and should be left unchanged.

Follow Us

Address

Clarity Legal Group
1414 Raleigh Road Suite 445
Chapel Hill, NC 27517
United States (US)
Phone: 919-484-0012

reply@claritylegalgroup.com

Mailing Address
PO Box 2207
Chapel Hill, NC 27515

Exchange West Office Map

Office Hours

Monday9:00 AM - 5:30 PM
Tuesday9:00 AM - 5:30 PM
Wednesday9:00 AM - 5:30 PM
Thursday9:00 AM - 5:30 PM
Friday9:00 AM - 2:00 PM

Map

clarity_sidbr_map
  • About The American Academy
  • Disclaimer
  • Diversity
  • Sitemap
  • Privacy Policy
  • © 2023 American Academy of Estate Planning Attorneys.
    All Rights Reserved.
    Attorney Advertisement
  • Clarity Legal Group footer logo

    Clarity Legal Group is a registered Trademark and trade name for The Mark Costley Law Group, PLLC


    • Read Our 5-Star Client Reviews

"AV® , AV Preeminent® , Martindale-Hubbell DistinguishedSM and Martindale-Hubbell NotableSM are Certification Marks used under license in accordance with the Martindale-Hubbell® certification procedures, standards and policies."

x

Fill out the form below to access to the worksheets and checklists discussed in The Ultimate Caregiver Guide! After submitting this form, you can clic

  • This field is for validation purposes and should be left unchanged.