Downsides of Do-It-Yourself Powers of Attorney
Powers of attorney are powerful documents that grant another individual broad rights over medical and financial decisions. Such an important power should involve careful planning. Ready-made legal forms found online, software programs with legal templates, and other DIY solutions are attractive to many individuals due to the ease of access and low cost. However, template powers of attorney are not always the equivalent of a proper North Carolina power of attorney drafted by a lawyer.
Many states, like North Carolina, have strict requirements regarding execution of valid powers of attorney or advance directives. North Carolina statutory forms are recognized state-wide, along with Five Wishes – another document that provides legal authority over medical decisions to another individual. Our estate planning lawyers in Chapel Hill provide a breakdown of Statutory Forms v. Five Wishes Documents here.
DIY powers of attorney have several downsides:
Fail to be up-to-date. Laws change and documents might need to be updated to reflect those changes. Many times laws change faster than online legal templates can respond. Was the document completed 15 or 20 years prior? Some banks and other institutions might try to avoid a potential lawsuit by denying an outdated power of attorney.
Missing provisions and definitions. A DIY power of attorney might fail to address certain powers or limitations, such as a gift rider—which would limit the attorney-in-fact’s ability to make gifts to third parties. Likewise, a DIY advance directive might lack “safe harbor” language. These terms minimize the healthcare provider’s liability. Some healthcare providers might not recognize a DIY power of attorney for this reason. “Springing” powers of attorney, which go into effect when the individual becomes disabled, should include clear definitions of how incapacity is determined.
Not filed or managed properly. Depending on the circumstances and powers afforded in the power attorney, the document might need to be filed in order to be enforceable. For example, for transactions involving real property, powers of attorney might not be recognized if they were not recorded by deadline in the County Register of Deeds. North Carolina also provides that, once the principal becomes incapacitated, a financial power of attorney must be recorded at the Register of Deeds office for their county of residence in order for the Agent named in the document to have authority to act on their behalf.
The appointed agents in financial and medical powers of attorney can take control over the individual’s assets, sign contracts, and consent to medical procedures on their behalf. When the right person is appointed and the proper documents are complete, these authorities are helpful if the individual becomes incapacitated. DIY forms generally are not the ideal solution to an important estate planning matter. If you do plan to use these forms, at the very least contact an attorney to review the forms.
