Takeaways
- A power of attorney (POA) is a key estate planning document that allows a person (the “principal”) to name a trusted individual (the “agent”) to act on their behalf if they are unable to manage their affairs. The agent has a legal duty to act in the principal's best interest.
- Two main types of POA are a financial POA (handling money and bills) and a medical POA (making health care decisions).
- Appointing one sibling as agent can sometimes lead to family tension, as siblings who are not named typically have no automatic right to access financial, legal, or medical information.
- If the principal is still mentally competent, they can revoke the POA at any time. If not, and the agent is acting improperly, family members may ask a court to remove the agent and appoint a guardian.
- A POA ends at the principal’s death; an executor then takes over management of the estate.
- To help prevent conflict, principals may name co-agents (ideally able to act independently) or a professional fiduciary, and should consider clear communication or written guidance to avoid disputes.
A power of attorney is one of the most important legal documents in estate planning. However, when one sibling is named in a power of attorney, there is the potential for disputes with other siblings. No matter which side you are on, it is important to know your rights and limitations.
What Is a Power of Attorney?
A power of attorney (POA) allows someone to appoint another person — an attorney-in-fact or agent — to act in their place if they ever become unable to manage their own affairs (incapacitated).
Note that each state will have specific rules for the format, content, and provisions of powers of attorney. For example, in some states, you may be able to name one person as your agent, or more than one person. Your agent(s) will have the authority to act and the power to handle affairs for you, including carrying out bank transactions, signing agreements on your behalf, or dealing with your creditors.
There are also rules regarding your agent’s legal responsibilities. For instance, they must act in your best interest. They are required to share any relevant documents with a co-agent or successor agent. And they must avoid any conflicts of interest, among other duties.
Types of Powers of Attorney
The two main types of powers of attorney are financial and medical.
Financial Power of Attorney
Financial POAs usually include the right to open bank accounts, withdraw funds, trade stock, pay bills, and cash checks. However, a financial power of attorney may authorize an agent to make additional financial decisions, such as giving gifts, only if that authority is specifically included in the document.
Medical Power of Attorney
Medical (or health care) POAs allow the agent to make medical decisions for the principal. In all these tasks, the agent is required to act in the principal’s best interests. The POA document explains the specific duties of the agent.
POA Among Siblings
When a parent names only one child to be the agent under a power of attorney, it can cause feelings of resentment and distrust. If you are dealing with a sibling who has been named agent under a POA or if you have been named agent over your siblings, the following are some things to keep in mind:
- Right to information. Your parent does not have to tell you whom they have chosen as their agent. In addition, the agent under the power of attorney isn’t required to provide information about the parent to other family members.
The lack of transparency is often the flashpoint for disputes. Siblings who are not the agent may suspect financial mismanagement or undue influence, especially if the parent’s health is declining or their financial circumstances appear to change rapidly.
While the agent has a duty to the principal (the parent), this duty does not legally extend to the other siblings. This means that a concerned sibling often has no right to see bank statements, investment records, or even the POA document itself, which may lead to frustration and the belief that the agent is hiding something, even if they are acting properly.
- Visitor access to the parent. An agent under a financial power of attorney should not have the right to bar a sibling from seeing their parent. A medical power of attorney may give the agent the right to prevent access to a parent if the agent believes the visit would be detrimental to the parent’s health.
- Revoking power of attorney. As long as the parent is competent, they can revoke a power of attorney at any time, for any reason. The parent should put the revocation in writing and inform the former agent of their decision.
- Removing an agent under power of attorney. Once a parent is no longer competent, they can’t revoke the power of attorney. If the agent is acting improperly, family members can petition the court to challenge the agent. If the court determines the agent is not acting in the parent’s best interest, it may revoke the power of attorney and appoint a guardian.
Challenging an agent in court is a serious and often expensive legal proceeding. The petitioning sibling must present sufficient evidence that the agent is abusing their authority, neglecting the parent’s needs, or engaging in financial exploitation. Simply disagreeing with the agent’s decisions, such as selling a family home or changing investment strategies, is usually not enough to justify removal.
The court’s primary concern is always the welfare of the parent. If the court finds that the agent has breached their duty, the agent will be removed, and a neutral third-party guardian or professional fiduciary may be appointed to manage the parent’s affairs.
- The power of attorney ends at death. If the parent under the power of attorney dies, the agent no longer has any power over the estate. The court will need to appoint an executor or personal representative to manage the decedent’s property.
Avoiding Conflict
If you are drafting a POA document and want to avoid the potential for conflicts among siblings, there are some options. You can name co-agents in the document. You need to be careful how this is worded, or it could cause more problems. The best way to name two co-agents is to let the agents act separately.
Another option is to steer clear of family members and name a professional fiduciary.
Sibling disputes over how to provide care or where a parent will live can escalate into a guardianship battle that can cost the family thousands of dollars. Drafting a formal sibling agreement (a family care agreement) is a way to give guidance to the agent under the power of attorney and provide for consequences if the agreement isn’t followed.
Even if you don’t draft a formal agreement, openly talking about the areas of potential disagreement before a crisis occurs can help. If necessary, a mediator can help families come to an agreement on care.
To determine the best way for your family to provide care if a parent needs it, consult with an estate planning attorney near you.