Friday, August 17, 2007

Powers of Attorney - uses and problems

I sum up a power of attorney as creating an alter ego for the person making the power of attorney. Let me throw in a couple of terms here. The principal is the person creating the power of attorney and attorney-in-fact is the name given to the person getting the power of attorney. The General Assembly set out the powers in a whole chapter under Article 5 of Title 30 and include about everything that anyone can do with money and/or property. Those powers go into effect at a certain time or upon the occurrence of an event.

Along with these powers of attorney there are health care powers of attorney. For this type, the principal designates someone to make medical decisions for the principal.

Generally speaking, a durable power of attorney finds it greatest use when the principal becomes incapacitated so that they cannot carry on with their affairs. With health care powers of attorney that incapacity may be that one is unconscious while the ordinary power of attorney could go into effect when the principal cannot travel to the bank.

During the discussion with the lawyer, one needs to discuss not just the need for the power of attorney but how you want to use the power of attorney. Think about this - how are the bills to get paid if you are in the hospital or Africa? Go beyond bills and think about every sort of activity that requires you to do something by yourself and substitute that for bills. Powers of attorney give someone else the authority to do these things instead of you but only when you let them (that is the designated time to start power of attorney) or when you cannot do them for yourself (occurrence of an event power of attorney).

I think the same reasoning applies to health care powers of attorney. Do you want a certain sort of treatment and want to make sure you get it even when you cannot tell the doctors your wishes? If yes, then you need to get a health care power of attorney.

One thing forbidden the attorney-in-fact is executing a Will for the principal. I bring this up because of an article I ran across in the Times of London: Power of attorney: what can go wrong? The subheadline actually got me to read the article: What happens if your mother leaves all her money to her new home help? What is that a in-home healthcare worker got what would be a durable Power of Attorney and then used it to get a Will. Not likely to happen in Indiana because our statute explicitly states the attorney-in-fact cannot execute a Will. However, other things can happen.

Taking the same outline as the Times' story, I see a potential problem happening without any need for a Will. The power of attorney creates enough power for the attorney-in-fact to make a lot of mischief. I will outline in the near future the ways Indiana protects the principal, but in the meantime I will suggest a simple expedient. Give copies of the power of attorney to the banks handling the principal's money and also to anyone holding money or assets of the principal.