Make Sure You Trust Your Attorney-in-Fact
Executing a Power of Attorney form is simple in Minnesota, so long as you trust that person
on February 28, 2018
Updated on June 3, 2022
Some of the important decisions can be made through a Power of attorney document. POAs simplify the process of granting legal authority over one person’s financial affairs to a fiduciary that acts on behalf of the principal. Anyone can print off a POA form and sign it in front of a notary; neither an attorney nor the courts need be involved, meaning the form can be completed in minutes.
It is, however, this exact simplicity that fools people into not being concerned with what they’re signing.
POA forms grant substantial authority
The person granting broad powers to another within a POA is the “principal.” The person receiving the authority is the principal’s “attorney-in-fact.” The authority granted over one’s finances in the POA is nearly limitless. The form lists many powers, including:
Withdraws from banking accounts
Making changes to investments, and selling or purchasing stocks
Buy or sell real estate
Modify insurance policies, cancel policies, or change beneficiaries
Making gifts to others
Making business transactions or decisions
Settle law suits
Although the Minnesota Statutory Short-Form POA allows principals to limit authority to one power or even one transaction, many principals granting authority under a POA simply mark the catch-all provision of the form, which grants authority to all 13 expressed powers and “all other matters.”
Trusting the attorney-in-fact is most important
The moment the principal signs the POA form, the attorney-in-fact may be given complete authority to act for the principal in any financial transaction, with any financial institution. The principal will be bound by whatever action the attorney-in-fact takes on his or her behalf, whether the principal agrees with the decision or not. Therefore, principals typically name spouses, relatives or close friends as their personal representative. Those closest are usually the most trustworthy.
If a principal determines they have chosen the wrong person to serve as attorney-in-fact, the form can easily be revoked by notifying the attorney-in-fact or institutions where it is used.
POAs can be made “durable”
A durable power of attorney has been made “durable” if and/or when the principal becomes incapacitated and unable to make decisions for themselves and the attorney-in-fact is still able to make financial decisions for the principal. The potential for incapacity requires the principal to trust their attorney-in-fact, because it is at this stage where the attorney-in-fact is best positioned to take advantage of their principal. Once incapacitated, the principal will clearly be unable to judge the trustworthiness of their attorney-in-fact.
Once incapacitated, it is too late to enter into a POA or revocation—a person must have capacity to enter into an agreement. Those close to someone who becomes incapacitated must apply to the courts for a court-supervised guardianship, conservatorship or both. Obtaining a guardianship or conservatorship through the courts is an expensive process, even without disputes among family members and close friends.
Don’t make this decision without legal advice
Anyone considering executing a POA, a legal document, should do so with caution, and should voice any questions or concerns about the decision. Only an experienced Minnesota estate planning attorney is able to answer these questions and analyze these concerns for a potential principal. A law firm or elder law lawyer can draft a general power of attorney that can be essential to your estate planning documents.