Issues That Can Derail Your Power of Attorney Plan

In the estate planning realm, power of attorney is among the simplest, most powerful, and most versatile instruments available. Simply put, a power of attorney allows you (the principal) to appoint someone else (the attorney in fact) as your legal representative, giving that person as much or as little authority as you see fit. But as useful as power of attorney is, no legal arrangement is foolproof. There are still several major issues that can arise and derail a poorly executed power of attorney plan. To avoid such outcomes, consider working with our Springfield power of attorney counsel to create the strongest plan possible. 

Capacity Issues

One of the major perks of power of attorney is that it does not involve probate courts. The principal, the attorney in fact, and their lawyer(s) hash out the details privately and execute the document themselves. But one of the threshold requirements for executing a power of attorney is that the principal must have the mental capacity to do so — i.e., the principal must grant the power of attorney before they become disabled or incapacitated in some way. Questions about the principal’s mental capacity at the time they execute the power of attorney can cast doubt on the validity of the arrangement, opening it up to potential challenges. If you’re planning on using a power of attorney to plan for long-term care, time is of the essence. On the flip side, the attorney in fact must also possess the requisite capacity to discharge their duties. Selecting an attorney in fact who is aged or has health issues that could affect their ability to serve is, therefore, ill-advised. 

Abuse of Authority 

Attorneys in fact can exercise an extraordinary amount of power over their principals’ affairs (depending on the terms of the instrument). In recognition of that power, the law imposes certain fiduciary duties upon attorneys in fact, with the most important being to act only in the principal’s best interest and to avoid self-dealing and conflicts of interest. But with such power comes the potential for abuse. A ways attorneys in fact can abuse their authority include: 

• Exceeding the scope of the power granted in the power of attorney instrument 
• Disregarding the instructions contained in the power of attorney instrument 
• Stealing money or other assets from the principal 
• Self-dealing (e.g., profiting from the sale of the principal’s property) 
• Commingling the principal’s assets or property with other assets or property 
• Using their position to exert undue influence on the principal 

Power of attorney abuse can often be difficult to detect, particularly if the attorney in fact is acting under a general power of attorney that grants them the maximum powers the law allows. If you think that an attorney in fact is abusing their authority, you should consider discussing your concerns with our Springfield power of attorney counsel. 

Conflicts of Interest 

As we’ve noted, avoiding conflicts of interest is one of the primary duties of attorneys in fact. Generally, a conflict of interest arises in the power of attorney context when the attorney in fact has a personal interest that could compromise their ability to act solely in the best interest of the principal, which could lead to a situation where the attorney in fact makes a decision that could harm the principal. This could occur, for example, where an attorney in fact with financial power of attorney is also a beneficiary of the principal’s estate and makes decisions that would benefit himself or herself at the expense of the principal or other beneficiaries of the principal’s estate. Readers should therefore exercise care when choosing their attorney in fact, taking into consideration any interests the potential attorney in fact has that might conflict with their own. 

Lack of Clarity in the Power of Attorney Instrument 

The authority granted in a power of attorney can be as broad or as narrow as the principal wishes. For example, a power of attorney might grant the attorney in fact the authority to handle all financial transactions for the principal or merely real estate transactions. But lack of clarity in the instrument can create gray areas in which an attorney in fact — whether intentionally or unintentionally — acts contrary to the principal’s interests. You can mitigate the risk of doubt by working with our Springfield power of attorney counsel to draft a power of attorney that fully, accurately, and clearly reflects your wishes. 

Third-Party Refusal to Honor the Power of Attorney 

An attorney in fact acting under a valid power of attorney has the same authority as the principal acting for himself or herself — including in their dealings with third parties. But third parties are often reluctant to honor an attorney in fact’s authority out of fear that the attorney is misrepresenting the nature of their relationship with the principal or that they may be liable to the principal for any damages arising out of their dealings with the attorney in fact. Missouri law generally exempts third parties from liability in their dealings with attorneys in fact, but certain institutions (especially banks) are nonetheless often hesitant.

Using the Wrong Type of Power of Attorney 

There are many different types of power of attorney, but two of the most important categories into which all powers of attorney fall are “non-durable” and “durable.” A non-durable power of attorney terminates upon the incapacity of the principal. A durable power of attorney continues in effect even after the principal becomes incapacitated, making them ideal instruments for crisis planning. However, power of attorney is only durable if it is designated as a “durable power of attorney” and contains specific statutory language. Using a non-durable power of attorney when you intended the power of attorney to be durable can seriously compromise your estate plan. 

Avoid Unexpected Issues by Working With Our Springfield Power of Attorney Counsel 

The last thing you want in your estate plan is unexpected and unpleasant surprises. You can avoid such outcomes by working with experienced attorneys to craft the strongest estate plan possible. To get started, please contact the Springfield power of attorney counsel at the LifeGen Law Group by calling 417-823-9898 or using our online contact form.