A power of attorney is one of the most important legal documents you can create, but only if it is done correctly. A flawed POA can be worse than no POA at all, giving you a false sense of security while leaving your agent unable to act when it matters most. Here are the most common mistakes people make when creating a power of attorney and how to avoid each one.
Mistake 1: Waiting Too Long to Create a POA
This is the most common and most consequential mistake. A power of attorney can only be created by someone who is mentally competent. If you wait until you are facing a health crisis or cognitive decline, you may not be able to create a valid POA. At that point, the only option for your family is the expensive and time-consuming guardianship process.
How to avoid it: Create your POA now, while you are healthy and competent. Do not wait for a specific triggering event. Every adult over 18 should have a power of attorney in place.
Mistake 2: Choosing the Wrong Agent
Your agent will have significant authority over your finances, healthcare, or both. Choosing someone who is unreliable, financially irresponsible, or not aligned with your values can lead to poor decisions, financial mismanagement, or outright abuse.
How to avoid it: Choose an agent based on trustworthiness, competence, availability, and willingness to serve. Do not choose someone simply because they are your oldest child or closest relative. Consider their financial acumen, emotional resilience, and track record of responsibility.
Mistake 3: Not Naming Successor Agents
If your primary agent is unable or unwilling to serve when the time comes and no successor is named, your POA is effectively useless. Your family is back to square one, facing the guardianship process.
How to avoid it: Name at least one, and preferably two, successor agents in your POA document. Choose people who are likely to be available and capable when needed, and make sure they know they have been named.
Mistake 4: Using Vague or Overly Broad Language
A POA that grants "all powers" without specifying what those powers include can create problems. Financial institutions may refuse to honor it because they cannot determine whether the agent's specific action is authorized. On the other hand, language that is too narrow may leave your agent unable to handle situations you did not anticipate.
How to avoid it: Use clear, specific language that identifies the powers you are granting. List the major categories of financial or healthcare authority explicitly. If you are using a state statutory form, the powers are usually already listed in a clear format that institutions are comfortable accepting.
Mistake 5: Failing to Make the POA Durable
If you are creating a POA for incapacity planning, it must be durable, meaning it remains effective even after you lose mental capacity. A non-durable POA terminates the moment you become incapacitated, which defeats the entire purpose of creating it for long-term planning.
How to avoid it: Include explicit durability language in your POA, as required by your state's law. The specific language varies by state, but it generally states that the POA shall not be affected by the principal's subsequent disability or incapacity.
Mistake 6: Not Following State Execution Requirements
Every state has specific requirements for how a POA must be executed, including rules about signing, witnesses, and notarization. Failing to meet these requirements can invalidate the entire document.
How to avoid it: Research your state's specific requirements or use a state-specific form. Common requirements include the principal's signature, one or two witnesses (with restrictions on who can serve as a witness), and notarization. When in doubt, follow the most stringent interpretation of your state's requirements.
Mistake 7: Not Notarizing the Document
Even in states where notarization is not strictly required for all POAs, failing to notarize can create practical problems. Many banks, financial institutions, and healthcare providers will refuse to honor a POA that is not notarized. Notarization also provides important legal protections against claims of fraud or forgery.
How to avoid it: Notarize your POA regardless of whether your state requires it. The small cost and effort of notarization are insignificant compared to the problems that can arise from an unnotarized document.
Mistake 8: Signing the POA Before the Notary Appointment
A notary must witness you signing the document. If you sign it before meeting with the notary, the notary cannot notarize it. This is a surprisingly common mistake that can delay the entire process.
How to avoid it: Bring the unsigned document to the notary. Sign it in the notary's presence after they have verified your identity and confirmed that you are signing voluntarily.
Mistake 9: Not Distributing the POA
Creating a POA is only half the battle. If your agent does not have a copy, your banks do not know it exists, and your healthcare providers are not aware of it, the document may be useless in a crisis.
How to avoid it: After executing your POA, provide copies to your agent and any successor agents, your banks and financial institutions, your healthcare providers (for a medical POA), and any other relevant parties. Store the original in a safe, accessible location and make sure your agent knows where to find it.
Mistake 10: Treating the POA as a One-Time Task
Life changes constantly. The agent you named five years ago may no longer be the right choice. Your financial situation may have changed. You may have moved to a different state with different requirements. A POA that is never reviewed or updated may not reflect your current needs.
How to avoid it: Review your POA every three to five years and after any major life event, such as marriage, divorce, the birth of a child, a significant change in finances, or a move to a new state. Update the document as needed to reflect your current circumstances and preferences.
Mistake 11: Creating Only One Type of POA
Many people create a financial POA but skip the medical POA, or vice versa. Both documents serve critical but different purposes. A financial POA without a medical POA leaves your healthcare decisions unaddressed. A medical POA without a financial POA leaves your finances unmanaged.
How to avoid it: Create both a durable financial POA and a medical POA (healthcare proxy). These are separate documents that together provide comprehensive protection for both your finances and your healthcare.
Mistake 12: Not Discussing Your Wishes with Your Agent
Creating the POA document is important, but it is equally important to communicate your wishes, values, and preferences to your agent. Without these conversations, your agent is left guessing about what you would want in any given situation.
How to avoid it: Have detailed conversations with your agent about your financial priorities, your healthcare preferences, your values, and your wishes for specific scenarios. For healthcare, discuss your feelings about life support, palliative care, and quality-of-life considerations. For finances, discuss your approach to spending, investing, and charitable giving.
Mistake 13: Not Considering Digital Assets
Most traditional POAs were drafted long before the digital age. If your POA does not address digital assets, your agent may be unable to access your email, social media, cryptocurrency, online banking, or other digital accounts.
How to avoid it: Include specific provisions in your POA authorizing your agent to access and manage your digital assets. Create a digital asset inventory and store access credentials securely where your agent can find them.
Mistake 14: Using a Generic Online Template
Not all POA templates are created equal. A generic form downloaded from the internet may not comply with your state's specific requirements, may lack important provisions, or may use outdated language that institutions will not accept.
How to avoid it: Use a state-specific POA form or a service like mypoa.ai that generates documents tailored to your state's requirements.
Get Your POA Right the First Time
Avoiding these common mistakes can make the difference between a POA that works when you need it and one that fails at the critical moment. By taking the time to create a properly drafted, properly executed, and properly distributed power of attorney, you ensure that your agent can act effectively on your behalf.
mypoa.ai is designed to help you avoid these pitfalls by guiding you through the POA creation process with state-specific requirements, clear power definitions, and prompts to address key decisions like durability, successor agents, and digital assets. Your download includes detailed execution instructions for proper signing, witnessing, and notarization.