What is a “Power of Attorney” (and why you probably need one)? Part 2

In Part 1 of this blog post, I addressed 1)  what a Power of Attorney (POA) is and 2) the different types:  limited vs. general/durable and springing vs. immediate.  In this Part, I will discuss powers that can and should be given, what a POA can’t do, and who to select to be your POA.

Powers that Can and Should be Given in a Power of Attorney

If you’re creating a limited Power of Attorney [see Part 1 of this blog post], then you’ll give whatever powers are necessary to accomplish your limited purposes in creating the power (like the power to handle a particular real estate sale).  However, almost everyone else is dealing with Powers of Attorney for estate planning purposes, meaning they are trying to plan ahead for possible future illness or disability, and they want to make things easier for their family if that happens.  All of these people want a general/durable Power of Attorney (my preference being immediate for most cases), granting most or all of the powers allowed in the state they are residents.

Powers of Attorney are creations of state law.  The state of your residency lists all of the powers that can be granted, and those powers need to be referred to in the document. 

A document that says “I give my Goat Buttermilk my Power of Attorney” simply won’t have any effect.  With this language, I haven’t given Buttermilk any powers (which is a good thing—she’s an unscrupulous scoundrel). 

Instead, each power either needs to be listed, or the part of the legal code cited, in order to grant that power.  Things like Banking, Real Estate, Retirement Accounts, Insurance, etc.  The document will likely be several pages long with a long list of powers.  You should read those powers—know what powers you’re granting!  In most cases the creator of a Power of Attorney should include all allowable powers under his or her state’s law (unless you’re appointing my goat Buttermilk).

I sometimes find BIG problems in Powers Attorney that people have downloaded from the internet or have even gotten from other attorneys. One of those problems is not including all possible powers.  For example, in 2005 Indiana added a separate power called “Retirement Accounts.”  To deal with IRAs, 401(k)s, etc., a Power of Attorney created after 2005 MUST now say it is granting the power handle “Retirement Accounts.”  Any documents created before 2005 that doesn’t have this language can still be used to handle retirement accounts.  However, any document signed after that date cannot be used to handle retirement accounts, unless it specifically says power to handle retirement account. 

I still see many Indiana Power of Attorney forms—even in 2022—that don’t list “Retirement Accounts.”  This creates huge problems.  More recently, specific powers about Transfer on Death transactions and Electronic Property have been added to the law, but still haven’t been added to everyone’s POA forms!

I haven’t addressed healthcare/medical powers, which is a big, important area.  In Indiana, there has been a MAJOR LAW CHANGE in how medical powers are granted.  Through the end of the year, they can still be included in the list of powers in a Power of Attorney.  However, after the end of the year, Healthcare Powers need to be in a separate document.  I will be addressing this MAJOR LAW CHANGE in an upcoming blog post.  Any prior Powers of Attorney granting medical/health care powers will be grandfathered in and will still be effective, but any new powers must abide by the new law change.

There are still several important things about POAs that I need to address.  I’ll be covering them in my next couple of blog posts.  Those include:

  • What a Power of Attorney Can’t Do
  • Whom to Select as a Power of Attorney
  • How to Create a Power of Attorney
  • What to Do With Your Power of Attorney Document
  • How to Cancel or Amend Your Power of Attorney

Necessary Lawyer Stuff

This blog is provided for general information and is not legal advice.  You should not take any actions based on the content of this blog without seeking the advice of an attorney.  To get advice on your particular situation, seek specific legal counsel from your own attorney.  Also, some of the content of this blog is Indiana-specific and may not apply to your particular state of residence. 

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