What's the big deal about POAs?

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I've said it before, and I'll repeat it here: if you insist that you don't need POAs or refuse to include POAs in your estate plan, I'm not (going to be) your attorney.

Powers of Attorney (POAs for short) are estate plan documents that only apply during your lifetime. They give your named person(s) instructions and the legal authority to do certain things for you during your life and at the very end of your life. The two main types of POAs are the health care POA and the durable general POA. They are important no matter what and they are essential if you become incapacitated or incompetent.

A health care POA allows you to name the person you want to act as your Health Care Agent (decision-maker, sometimes called Health Care Proxy). Your Agent gains this authority if (and only if) your treating physician determines you cannot make/communicate about your health care decisions. If/when you regain the ability to make/communicate about your health care decisions, your Agent's authority ends. 

If you don't have a health care POA in place and you're unable to make/communicate about your health care decisions, North Carolina law defaults determine what happens next. Under the law, your health care provider must defer the decision to the following person(s) listed in priority order:

  1. Legal guardian;

  2. Attorney-in-fact under a general POA that includes health care decisions;

  3. Spouse;

  4. A majority of your parents and adult children;

  5. A majority of your adult siblings; or

  6. "An individual who has an established relationship with you, who is acting in good faith, and who can convey your wishes."

Health care POAs often include or are accompanied by advance directives for a natural death (also known as living wills). In North Carolina, an advance directive for a natural death allows you to state your wishes about using life-prolonging measures. They only apply if you (1) cannot make/communicate about your health care decisions, AND (2) are in one of three specific end-of-life situations. The situations are:

  1. You have an incurable condition that will result in your death relatively quickly.

  2. You are unconscious, and medical experts agree you will not regain consciousness.

  3. You have advanced dementia or other substantial loss of cognitive abilities, and medical experts agree you won't regain those abilities.

Life-prolonging measures are medical treatments that might postpone death. These measures include breathing machines, kidney dialysis, antibiotics, feeding tubes, artificial hydration, and similar things. Note: pain relief is not a life-prolonging measure (a common misconception!).

I've found that the COVID-19 pandemic has changed peoples' perceptions about the importance of health care POAs. More people know about them, and most people can imagine needing one. One good thing, I guess. Sadly, the same is not true about durable general POAs. 

I generally can predict how a conversation about durable general POAs will go by the facial expression a potential client has to the following. The durable general POA grants your named person (your Agent) the authority to manage your finances, property, and legal rights and obligations. It is active as soon as it is signed. Unlike the health care POA, I do not draft these documents to only go into effect upon the occurrence of certain events (in legal terms, "springing"). And, generally speaking, your durable general POA should grant your Agent the authority to act on your behalf in a wide variety of financial and property management situations. 

It's a powerful document, and with automatic and broad authority, there are countless ways a bad-acting Agent could do real damage. People who are nervous about or resistant to this document always ask me why I don't draft durable general POAs with "springing" authority. My answer? Four reasons:

  1. North Carolina law disfavors springing authority in durable general POAs them;

  2. Assessing someone's capacity to manage their property and financial matters is more complex and situational than determining someone's ability to make/communicate about their health care decisions (more on this below);

  3. In an ideal world, we'd each be able to precisely predict when and how we would need our durable general POA Agent to take over, but that's impossible;

  4. There is no default category of person under North Carolina law to take on this authority (unlike the Health Care POA). The default is not a person. It is a court process to determine capacity and name a Guardian. And that's the ultimate purpose of a durable general POA: to prevent the need for a court case.

Here's the reality of having a durable general POA with springing authority:

  1. What if the actual situation doesn't precisely (or remotely) match the conditions despite the need?

  2. How does the named Agent (or someone else) prove you meet the conditions? Who does your Agent prove it to?

  3. What happens if your financial institution (or other company) refuses to accept the Agent's authority for liability reasons regarding proof that you meet the conditions?

The answers to those questions all end up at the same place. Springing conditions often undermine this purpose and result in the person having that court proceeding regardless of their efforts to avoid it. 

Last but not least, it's all too easy to go down the rabbit hole of bad outcomes if the evil durable general POA does you wrong. But guess what? You get to pick your Agent. And if you have actual worries that they'll do any of those terrible, awful things to you, this isn't about the document. It's about the Agent. Pick someone else.

Heather HazelwoodAmpersand Law