What is a financial power of attorney?

A financial power of attorney (POA) is a device with which you can appoint a trusted adult to manage your affairs. In June 2012 West Virginia enacted the Uniform Power of Attorney Act which dramatically reformed the law in our state regarding financial powers of attorney. This question and answer is based on that law.  

In a power of attorney you are authorizing the person you appoint, your agent, to manage aspects of your finances typically starting at the moment you execute the POA. Many seniors believe that the agent’s authority under a power of attorney doesn’t begin until you are no longer capable of managing your own affairs, but this is a myth. The default position of a power of attorney is that agent authority begins immediately. 

You may choose to add language to your power of attorney document that would delay when the agent’s authority begins, this is called a springing power of attorney, because the authority springs forth when the circumstances or conditions are met as set forth in the document. Springing powers are rarely an effective or safe choice, this is why the new law makes immediate authority the default position. In older powers of attorney the authority commonly sprung forth when the principal became incapacitated. Since incapacity is not an on or off switch, but is rather a variable and complex circumstance, it can be nearly impossible to determine with certainty when a principal has become incapacitated to manage his or her financial affairs. People with dementia may have years of “good days and bad days,” and even have variable lucidity at different times of the day. Some medications and infections can cause temporary periods of confusion and memory problems. Different people and professionals can have conflicting assessments of a person’s incapacity. Capacity can come and go, making it very complicated if your document only gives authority when you are currently incapacitated. 

If the reason you do not want your agent to have authority now is because you do not trust him or her to have access to your money and property right now, then you are certainly choosing the wrong agent. Once you lose the capacity to oversee your agent’s actions, that person will not suddenly become more trustworthy. 

There are many considerations you should take into account when considering whether having a POA is right for you. This is not a kind of planning document that every person should have, necessarily. These documents give substantial authority over your property and finances to your agent. This power is easily exploited, and sadly this kind of abuse perpetrated by family, close friends, and trusted people is all too common. If someone is suggesting that you give him or her power of attorney you should never execute this document merely because you don’t want to hurt that person’s feelings, or because you are afraid he or she will not continue to help you if you don’t.  

For more information, see: Uniform Power of Attorney Act, W. Va. Code §§ 39B-1-101-110. (2015).