Why Correctly Crafting The Power Of Attorney Is Important In An Estate Plan
The power of attorney is a central feature of an estate plan. Such power is important if you have any concerns about the handling of health, business, financial, family, and legal decisions.
An estate planning lawyer will want you to do more than confer the power of attorney, though. They will also advise you to be careful in crafting. Here is why you need to correctly craft the power of attorney in your estate plan.
You don't want anyone acting outside of the scope of their legal powers. When you assign someone as an agent with the power of attorney, you need to carefully define the scope of their appointment. If you want your spouse to have the power of attorney for medical decisions, for example, then you have to be careful not to extend it beyond that. Otherwise, they could make financial decisions that exceed their domain knowledge.
Whenever you grant any powers under estate planning law, you want to carefully specify what the grant entails. A person might grant business powers to a close colleague, for example. Those powers may allow the colleague to vote for the grantor's shares or exercise board power. However, the grantor usually doesn't want them to go beyond a certain point. Consequently, they need to outline the limits.
The grant of the power of attorney usually applies to situations where a person is medically incapacitated, disappears, has been kidnapped, or is otherwise unavailable. What happens when the grantor regains their capacities? This isn't always a simple question, especially if there might be some lingering doubts about the grantor's condition. If the grantor suffered a brain injury, for example, there probably isn't a perfect dividing line in the medical literature between when they're able to resume legal and business powers and when they're not.
Your estate planning lawyer will need to provide clarity. The documents will state what the specific conditions should be for revoking the power of attorney so the grantor can resume normal operation in the business, legal, financial, and other capacities. Ideally, the estate should leave zero doubt about when this happens. That will minimize the risk of disputes and prolonged litigation.
Finally, a grant should state that the agent has fiduciary obligations. This means the agent will owe damages if they are negligent, reckless, or abusive in their exercise of the assigned powers. Not only does this protect the grantor's interests, but it motivates the agent to be prudent in their conduct.
For more info, contact an estate planning lawyer today.