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Does a power of attorney have limits?

On Behalf of | May 9, 2019 | Estate Administration

In planning for the future, some New Jersey residents set up a trusted friend or relative to be a power of attorney (POA) if the need should arise. In this relationship, the person who set up the POA is the principal, and the POA is the agent who carries out duties on behalf of the principal. Because POAs have wide ranging powers, some people might be nervous about setting up such a position. However, as powerful as POAs are, their powers do have limits.

Per Agingcare.com, generally, there are two types of POAs. Setting up someone to be a medical POA means that if you are incapacitated, your medical POA will make healthcare decisions on your behalf. The other type is a financial POA, who makes financial decisions if the principal is unable to for medical or psychological reasons. The division of these positions means a medical POA cannot make financial decisions and vice versa. However, some people will appoint someone with both medical and financial POA powers.

No matter how a POA is set up, there are still some actions a POA is not allowed to carry out. A POA cannot alter the last will and testament set up by the principal. A POA also cannot conduct actions for the principal after the principal has died, unless the principal has named the POA as the executor of the principal’s estate. Sometimes if a principal dies without a will, a POA may ask a court to become the estate administrator.

A power of attorney is also nontransferable. After a principal has given power to a POA, the POA cannot convey those powers to another person, though a POA candidate has the right to refuse the POA position in the first place. Still, a principal can choose to divide POA duties among a number of agents, or revoke the power of attorney and give it to someone else.

A POA also must carry out the duties of the position in an ethical manner. These duties include the fiduciary duty to act in the best interest of the principal. In the event a POA acts maliciously, such as neglecting the medical needs of a principal or stealing assets from the principal, a court may strip the malicious agent of the POA powers and possibly impose penalties.

Setting up a POA is not always a clear process, so consulting with a professional estate attorney can help clarify confusing issues. Keep in mind that this article is not written to provide legal counsel. Read it only for your educational benefit.