How to Assign Power of Attorney Without Sparking a Family Feud

By Considerable | Oct 6th, 2019

By Kenzo Nakawatase via Considerable

Deciding who gets the power of attorney is an important step for parents looking to organize their estate and plan for a future without them. This can be a complex process for many families, especially when there are numerous relatives involved.

Often the complications involve not just confusing legalese but the tricky emotional contours of family dynamics and money. It’s crucial to understand what power of attorney is, how it factors into estate planning, and how sibling roles can both differ and be shared.

Considerable spoke to estate-planning lawyers to get a clearer idea of how the power of attorney can work within a family and among siblings.

First off, power of attorney is a legal designation that gives an individual (or individuals) the authority to act on behalf of someone else, typically when that third party is unable to make decisions for themselves for reasons of ill health.

What is the difference between power of attorney and executor of the estate?

People sometimes confuse power of attorney with executor of the estate. Power of attorney authority is only in effect while the person who has granted the authority is alive.

Once that person passes away, the executor of the estate then assumes responsibility of managing the estate through the probate process.

Power of attorney authority is only in effect while the person who has granted the authority is alive.

These are two very different roles, though they can be held by the same person. The individual(s) are most often adult children of the person granting the power, although a person of sound mind can assign the roles to anyone who agrees in writing.

There are different varieties of power of attorney. The most common are general power of attorney and medical power of attorney.

The general power of attorney refers to the management of financial, business, or private affairs, and applies to the type of circumstances addressed here.

If a parent grants power of attorney to one of their children, that child then has the sole authority to act on behalf of the parent.

Things can get dicey if there isn’t proper trust among siblings, or transparency when major decisions are being made.

Nic Camargo, Elder Law expert at Foster Swift Collins & Smith, plainly described to Considerable what this looks like for the other siblings: “This means, for other siblings, that they must respect the inherent authority of the sibling with the power of attorney to make decisions for the parent related to their business, private, and/or legal affairs.”

The fiduciary responsibility of power of attorney

It’s important to remember that the power of attorney is a fiduciary obligation, meaning the person who holds it must act in the best interests of the parent, not their own, and abide by certain rules that ensure this. Still, things can get dicey if there isn’t proper trust among siblings, or transparency when major decisions are being made.

Camargo outlines three levels of understanding he thinks are crucial:

Parents must understand the great power they are bestowing
The sibling who has been named must understand the range of responsibilities they now have
The siblings who have not been named must and respect the arrangement, while, as Camargo puts it, “being cognizant of the potential for mismanagement of affairs”

Joint power of attorney

Having joint power of attorney between two siblings is also an option families can explore.

James Gillis, an estate planning attorney at Offit Kurman, explained: “A principal could appoint two or more agents. The agents would either have to act jointly (both agents have to agree in order to act) or independently (each agent has full authority to act alone).”

This option may lessen the chances for jealousy and mistrust within the family, but can also prolong and complicate decision-making. And it creates the possibility that the siblings simply cannot agree on something and an important decision remains gridlocked indefinitely.

Or, as Gillis explained, “Appointing independent agents gives them more flexibility to help the parent manage his or her affairs. Appointing joint agent gives the principal somewhat more protection, since the agents have to act together and therefore serve as a check on each other.”

Whether one individual or more are entrusted with power of attorney, communication and transparency are the most important factors in avoiding painful disputes among family members.

Joint power of attorney may lessen the chances for mistrust within the family, but can also prolong and complicate decision-making.

Nic Camargo emphasized the importance of communicating: “As with most items related to the care of loved ones — especially the care of aging parents — communication is the key aspect to avoid future issues.”

“Sharing information is the best way to avoid disputes,” Gillis added. “If financial information is needlessly kept secret, the people without information will be suspicious and draw their own often negative conclusions. If information is shared on a regular basis, the others feel empowered to watch what is happening and can say something early on if they see an issue.”

Making sure your entire family is on the same page can make all the difference when it comes to planning next steps. Blood, after all is thicker than water. And less expensive than lawyers.