There are situations in which people cannot manage their own affairs. They could end up in a coma after a car crash, for example. In such circumstances, powers of attorney (POAs) can be highly valuable documents.
They authorize a trustworthy person to handle financial or medical issues on behalf of the incapacitated person. Many people dislike the idea of drafting POAs specifically because they do not want someone else to abuse the authority granted to them in an emergency scenario.
People may not understand the rules that limit the authority granted to an agent or attorney-in-fact. There are actually several scenarios in which POAs lose their legal authority. When do agents lose the authority to act on behalf of someone who can’t act for themselves?
When an individual recovers
The best outcome after medical incapacitation is the patient’s recovery. Those who regain consciousness, respond well to medication or otherwise experience a marked improvement in their medical conditions can resume managing their own affairs.
When an individual dies
Powers of attorney only remain in effect while the incapacitated person is still alive. Once they die, the personal representative of their estate may assume authority over their financial affairs.
When issues become permanent
Depending on whether the documents are durable POAs or not, they could also lose their authority if the person who drafted the documents becomes permanently incapacitated. In cases where concerned parties could seek guardianship, POAs could lose their authority.
Adding the right language to POAs and choosing an appropriate agent can help people feel more comfortable with allocating authority to another person. People who understand the rules that govern estate planning can protect themselves and their loved ones from a variety of different difficult situations.
