Due to changes in Maine’s laws regarding guardianship and conservatorship, we often tell our clients that signing a Power of Attorney for both Financial/Legal and Healthcare matters is almost as important as preparing a Will. We always encourage our clients to consult with the person that they are going to name as their “Agent” because the job is normally much more significant than our clients imagine.
An Agent appointed under a Durable Financial Power of Attorney is usually given broad power to manage and maintain all of the assets of the “Principal” (the person who signs the Power of Attorney). A Power of Attorney for financial/legal matters normally grants the Agent the power to do things like: access, deposit and write checks on the bank accounts of the Principal; make investment decisions; sell or mortgage real estate owned by the Principal; and sign contracts and file tax returns on behalf of the Principal. These powers could be effective as soon as the document is signed or the Agent might only be able to exercise the powers if the Principal were found to be disabled, depending on how the document is written.
An Agent appointed under a Healthcare Power of Attorney (sometimes also referred to as an “Advance Directive”) is similarly given authority to “stand in the shoes” of the Principal to make healthcare decisions for the Principal. Commonly, this would include the power for the Agent to do things like: access private healthcare information about the Principal; make decisions about whether the Principal should receive a certain type of treatment; and determine whether life sustaining measures like artificial nutrition and hydration should be administered to the Principal. The Agent is usually only called upon to make these kinds of decisions if the Principal hasn’t previously given written instructions about their preferences to their healthcare provider(s).
The Agent has a responsibility to use the authority given in a Power of Attorney for the benefit of the Principal. This responsibility is known in the legal world as a “fiduciary duty.”
In the financial context, the Agent’s fiduciary duty is to act carefully to manage the Principal’s property. The Agent should not be spending the Principal’s money for reasons that the Principal would not if the Principal were well enough to do so themselves. An Agent also must be careful not to engage in risky investments or spend money irresponsibly. Rather, the Agent should be considering the long term needs of the Principal and wisely managing the assets of the Principal to be sure that the Principal can maintain the standard of living that they are used to.
From the healthcare perspective, the Agent’s fiduciary duty is to ensure that the wishes of the Principal are carried out. This means that the Agent should not be making decisions based on what the Agent thinks is right; instead, decisions should be made based on what the Agent knows the Principal would want to do under the same circumstances.
As you can probably guess from this discussion, communication between the Principal and the Agent is critical, and not just when the Agent is actively exercising their authority. How else can an Agent know whether they are performing their duties in a manner that is consistent with what the Principal would want? The Principal should ideally assemble important financial and healthcare information in a place where their Agent will know to find it should they need to.
The Principal should also make sure to choose the person to serve as their Agent carefully, and it might be that the Agent chosen for the Financial Power of Attorney is different than the Agent chosen for the Healthcare Power of Attorney. In other words, the person in your life who is a responsible money manager and very well organized might not be the right person to make healthcare decisions for you if that person would not carry out your wishes out of a fear of losing you. Likewise, a person who is sensible and respects your wishes about life sustaining treatment might not be the right person to be your Agent in a financial power of attorney if they have a hard time keeping track of their own funds.
Ultimately, having a Power of Attorney in place for both Financial and Healthcare matters is critical – if there is no Power of Attorney in place and you become disabled and unable to tend to matters yourself, often the only option is for somebody to be appointed as a guardian or conservator. You should speak with an attorney before signing a Power of Attorney to be sure that you completely understand the authority and responsibility that you are giving to your Agent.
The information presented on this website is general in nature and not intended to be legal advice. No attorney-client relationship will exist with Jones, Kuriloff & Sargent, LLC unless agreed to in writing. Please contact us to discuss your particular situation.