A Power of Attorney (POA) is a legal document that designates and authorizes a person to act on someone else’s behalf. This can be essential when someone needs assistance with financial or healthcare matters or becomes unable to speak for themselves.
Although laws governing Powers of Attorney vary by state, the basic terms and types are similar nationwide. CaringInfo helps you navigate Powers of Attorney so you can confidently complete the right document for your situation.
Can a Caregiver be a Power of Attorney?
Yes—a caregiver can be appointed as Power of Attorney. However, it’s a decision that requires careful consideration.
Many seniors without close family nearby may choose a trusted caregiver to act as POA. While this might seem practical, it raises several concerns:
- Vulnerability: Elderly individuals might feel obligated to name a caregiver as POA, even if it’s not in their best interest.
- Risk of Abuse: A dishonest caregiver could exploit the principal’s finances or assets.
- Family Disputes: Other relatives might contest decisions made by a caregiver who holds POA authority.
Can a Power of Attorney be a Paid Caregiver?
Legally, a person can serve as both Power of Attorney and paid caregiver—but it carries significant risks.
Here’s why combining these roles can be problematic:
- Conflict of Interest: A caregiver with financial control could misuse funds or influence decisions for personal gain.
- Undue Influence: Family members might suspect the caregiver of pressuring the principal into signing documents or changing their will.
- Legal Scrutiny: Transactions between a POA and the principal could be questioned, especially if the principal becomes incapacitated.
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What Goes Into a Power of Attorney?
- The person creating the Power of Attorney is called the Principal.
- The person appointed to act on their behalf is called the Agent.
- Both the Principal and Agent must be at least 18 years old and of sound mind.
- Agents are not called “a Power of Attorney.” Instead, they have the power of attorney granted to them through the document.
Many Agents are also caregivers for the Principal. Throughout this guide, we use the terms “Principal” and “Agent” consistently to avoid confusion.
A Power of Attorney can be either durable or springing, and it can cover either healthcare or financial decisions. Healthcare and financial POAs are separate documents. Once executed (meaning legally signed and effective), a Power of Attorney remains valid until the Principal revokes it or dies.
Key Steps for Principals:
- Appoint a trusted person as an Agent.
- Clearly communicate wishes to the Agent.
- Empower the Agent to act on their behalf.
The best way for a Principal’s voice to be heard, even if they can’t speak for themselves, is to appoint trusted people and ensure those individuals know the Principal’s preferences. Agents have fiduciary (legal) obligations to act in the Principal’s best interests. Communication between the Principal and Agent is critical.
If the Principal changes their mind about who should serve as Agent, they can execute a new Power of Attorney. It’s also wise to name one or two alternate Agents in case the primary Agent becomes unavailable.
Are Powers of Attorney Valid in All States?
Yes, a Power of Attorney is valid in all U.S. states. However, specific rules and requirements vary. This becomes particularly important if an Agent must manage property or affairs in multiple states. For guidance, consult your local state bar association or a local attorney.
When Is It Useful to Have a Power of Attorney?
It’s wise to appoint an Agent before becoming incapacitated. As people age or face serious illness, managing finances and healthcare decisions can become challenging. Appointing someone in advance provides peace of mind and ensures continuity of care and financial management.
Even if someone has a Durable Healthcare Power of Attorney, they continue to direct their own healthcare decisions for as long as they are capable. The POA simply empowers the Agent to help carry out those wishes or speak for the Principal when necessary.
Example:
An Agent appointed under a Healthcare POA can talk with doctors on the Principal’s behalf and access medical records. Without a Healthcare POA, doctors may refuse to share medical information with anyone except the patient, causing delays and confusion.
Why Act Proactively?
If a person becomes incapacitated without a Power of Attorney in place, a court must intervene. A prospective Agent would need to petition the court for the authority to act on the Principal’s behalf, which can be time-consuming and stressful. Having a POA in place avoids this legal hassle.
Document Storage Tips:
Once a Power of Attorney has been executed:
- Keep both paper and digital copies.
- Retain all pages, even unused ones (e.g., notary pages), because institutions often require the complete document.
- Never give away the original document; let institutions examine it if needed, but always keep it in your records.
Types of Caregiver Power of Attorney:
There are two major types of POA, each of which may be durable or springing:
- Healthcare Power of Attorney
- Financial Power of Attorney
Healthcare Power of Attorney
A Healthcare Power of Attorney is separate from a Financial Power of Attorney. It appoints an Agent to communicate with doctors and make medical decisions if the Principal cannot do so.
Most Advance Directives include:
- A Living Will, describing what types of care the person does or does not want.
- A Healthcare Power of Attorney, naming an Agent.
Many advance directive forms let you choose whether the POA is:
- Durable: Effective immediately upon signing.
- Springing: Becomes effective only if a doctor certifies the Principal is incapacitated.
Because each state has its own forms and rules, it’s important to complete the correct documents for your state.
Importance of a Healthcare Power of Attorney
Without a Healthcare Power of Attorney, doctors and hospitals might refuse to share medical information with anyone other than the patient. Even if you choose not to complete a living will, it’s crucial to have at least a Healthcare POA so someone you trust can advocate for your care.
HIPAA and Privacy
Since 2003, the U.S. Department of Health and Human Services has enforced privacy regulations under the Health Insurance Portability and Accountability Act (HIPAA). HIPAA protects patients’ medical privacy and imposes serious penalties on healthcare providers who improperly release information.
Healthcare providers are typically unwilling to release protected health information (PHI) to anyone other than the patient without proper legal documents. A Healthcare POA should include HIPAA language to ensure that your chosen Agent can access your medical records and help make informed decisions if you become incapacitated.
Financial Power of Attorney
A Financial Power of Attorney authorizes someone to manage your financial affairs if you become unable to do so.
Online resources like LegalZoom and Rocket Lawyer offer forms you can use, but it’s essential to ensure they comply with your state’s laws. A Financial POA can grant broad or limited powers—for example, you might allow an Agent to manage bank accounts and insurance but prohibit real estate transactions.
Like healthcare POAs, financial POAs can be:
- Durable: Effective immediately upon signing.
- Springing: Effective only upon a specific event, like incapacitation certified by a doctor.
State Requirements:
Powers of Attorney must be signed according to state law. The good news is that twenty-eight states have adopted a universal form, available on websites like eForms.com. However, you should consult an attorney for complex situations.
Informing Financial Institutions:
Once a Financial POA is in place:
- Notify relevant financial institutions and businesses, including banks, insurance companies, credit card providers, investment firms, car dealerships, and even local stores.
- Reviewing bills and financial statements can help identify which organizations should be notified.
- Some institutions accept digital copies of the POA; others require paper copies or may want to examine the original document. Do not let them keep the original.
Financial caregiving is far more difficult without a Financial Power of Attorney.
Durable vs. Springing Powers of Attorney:
Durable Power of Attorney
A Durable Power of Attorney takes effect as soon as it’s signed. It gives the Agent immediate authority to act on the Principal’s behalf for the matters specified in the document. It remains in effect until revoked or until the Principal dies.
Note: Even with a Durable Healthcare POA, the Principal retains the right to direct their own healthcare for as long as they’re capable.
Springing Power of Attorney
A Springing Power of Attorney takes effect only when a physician declares the Principal incapacitated.
While this offers an extra layer of protection, it can create delays if urgent decisions need to be made while waiting for a physician’s certification. For this reason, Durable Powers of Attorney are often preferred for both healthcare and financial matters. Once a Springing POA is triggered, it remains in effect until the Principal dies or revokes it.
Communication Is Key:
Completing Powers of Attorney can feel overwhelming, but open communication is crucial. Discuss your wishes with your doctors, family, and trusted individuals. Clear conversations ensure that your wishes are understood and respected if you’re ever unable to speak for yourself.
CaringInfo offers guides and resources to help you communicate effectively and complete these important documents.
Frequently Asked Questions:
Can a Power of Attorney be revoked?
Yes. A principal can revoke a Power of Attorney at any time if they are mentally competent. Revocation should be done in writing and shared with anyone relying on the POA.
Does a caregiver automatically have Power of Attorney?
No. Being a caregiver does not automatically grant legal authority. A Power of Attorney document must be legally signed by the person granting authority while they are mentally capable.
What is a Power of Attorney (POA)?
A Power of Attorney is a legal document that allows someone (called the “agent” or “attorney-in-fact”) to make decisions and act on behalf of another person (the “principal”) in financial, legal, or health matters.