7 Power of Attorney Conflicts
Powers of attorney generally help to expedite decision-making regarding financial and health matters. Individuals (principals) utilize a power of attorney to grant a trusted person (agent) authority over important decisions in the event the principal becomes incapacitated or is otherwise unable to manage one’s own affairs. Maintaining powers of attorney in one’s estate plan is generally an optimal planning practice. However, some conflicts can develop. Our Chapel Hill estate planning attorneys review a few potential issues involving powers of attorney and ways to manage these concerns:
- Duplicates. If a principal completes a POA form, they should also complete the necessary steps under state law for revocation of any other outstanding POAs. Failing to follow these procedures could result in mismanagement of assets and care.
- Unregistered. Under North Carolina law, a durable power of attorney (DPOA) must be recorded in the Register of Deeds office in the principal’s resident county if the document is being used post-incapacitation. Neglecting to register the document can cause delays in managing the principal’s affairs. Learn more about registering POAs in North Carolina.
- Conflicts between POAs. If a principal names different people as agents under a durable power of attorney (DPOA) and health care power of attorney (HCPOA), the two agents might conflict on financial and healthcare matters. For instance, the health care agent might make medical decisions for the agent’s care that are costly. In order to cover medical expenses, the agent under the DPOA might need to release funds or sign off on sale of assets. If the agent under the DPOA declines to release funds needed for medical care elected by the health care agent, this could compromise the principal’s healthcare. One way to help prevent this type of situation is to name the same individual as agent on both forms.
- DIY. Relying on a do-it-yourself POA creates risks. For one, the document might not be valid under state law. Also, the document might fail to grant the authority that the principal intends if certain provisions are missing. Our estate planning attorneys review other problems with DIY powers of attorney. Best practice: Only use documents drafted by an attorney.
- Out-of-state. If a North Carolina resident travels to another jurisdiction and becomes incapacitated there, POAs that are valid in North Carolina might not be recognized elsewhere. This depends on the type of document and the jurisdiction where the individual has become incapacitated. For example, Five Wishes documents are popular types of healthcare POAs. They are acceptable documents in North Carolina and almost every state. At the following link we review more about healthcare POAs and the states where Five Wishes are not accepted.
- Third parties. Some financial organizations only accept completed copies of their internal forms. During regular estate plan reviews, verify with banks and other applicable institutions what their requirements are to ensure that estate plans comply.
- Naming a non-spouse. If a married principal failed to update their POA after a marriage, or appointed a non-spouse as an agent while navigating divorce, conflicts could develop between the agent and principal’s spouse. A spouse may have certain powers over joint property, investments, and financial accounts, which could oppose the authority of an agent.