Limited Power of Attorney & Other Tools to Avoid Conflict Between Co-Agents
September 28th, 2011
A Limited Power of Attorney, rather than General Power of Attorney, is one of the chief tools I use as an estate planning lawyer to reduce potential conflict between co-agents.
Besides a Living Will and Healthcare Power of Attorney, it’s a good idea to have a Power of Attorney drawn up to assign someone to handle your financial and business affairs should you become mentally incapacitated. You can assign one person, two people, or more as agents authorized to act on your behalf. You can assign them general authorization (known as General Power of Attorney), which I don’t recommend, or limited authorization (known as limited power of attorney), which defines specifically what the agent(s) is authorized to do.
Why I Prefer a Limited Power of Attorney
As an estate planning lawyer, I occasionally come across a case in which two or more people have been named as co-agents with equal authority and the co-agents disagree strongly on what action to take. Sometimes one agent is abusing their authority, such as using the maker’s money to pay their own bills.
There are a couple ways to avoid this kind of conflict and minimize the potential for abuse. My preferred way is to use a limited power of attorney. In this arrangement, you can give specific directions for what the agent(s) can and cannot do with your financial resources and business affairs. So you can state specifically where income is supposed to go and what the money can be spent on. I usually include a clause that prohibits each agent from using the money for personal expenses. This limits your exposure to an abusive agent.
A limited power of attorney can also state which agents handle specific responsibilities. This goes a long way toward reducing the potential for conflict. It can also require agents to work together or be unanimous in decisions before taking action.
Other Tools for Avoiding Co-Agent Conflict and Minimize Abuse
1. Have a meeting with your agents before the Power of Attorney is drawn up so that everyone is clear about what you have in mind.
2. Name one agent with successor agents who can take over if the first agent is unable to fulfill the role.
3. Put all assets in a trust, the documents for which will outline how the assets are to be managed. Power of Attorney does not usually give authority over trust assets.
A durable power of attorney, preferably a limited power of attorney, is one of four documents everyone should have in place. The others are a living will or advance directive, which outlines what medical treatment you want or don’t want should you become mentally incapacitated or comatose; a Medical Power of Attorney, which assigns someone to make medical decisions not covered by the living will should you become mentally incapacitated; and a trust, which protects your assets from probate court if you die and governs the use of those assets.
Your estate planning lawyer in Ohio can help you implement these documents. Call us for a Free Consultation regarding these documents and other estate planning needs. Call toll-free at 877-483-6730.