In some cases, two individuals may be named as co-agents or successor co-agents under a power of attorney. Generally, it is the duty of those co-agents to work together for the principal’s best interests. Unfortunately, issues arise and can quickly become more complex and complicated when co-agents are divided on what is in the best interest of the principal which can become troublesome and damaging for the principal. Even worse, agents can work contrary to one another depending on the wording of the document itself.
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Disagreement with Equal Powers
If two individuals are appointed co-agents under a Power of attorney requiring the agents to act jointly or in majority, disputes occur when they do not see eye-to-eye effectively causing a stalemate. If you are functioning as a co-agent under a Power of Attorney, but you and your fellow agent disagree with a decision or one side has stopped taking part in the decision-making process, what should you do?
The first step is to review the wording of the Power of Attorney to see if it specifies a resolution if these situations were to arise. If the language found in the Power of Attorney is insufficient to resolve the issue, and the disagreement is causing harm to the principal you should contact an attorney as soon as possible.
Disagreement with Individual Powers to Co-Agents or Numerous Valid Powers of Attorney
An individual can only have one Last Will and Testament at a time. In fact if a person validly creates a second Last Will and Testament, their original document is automatically null and void (whether that was their intention or not).
The same rules do not apply to Powers of Attorney. An individual can have as many Power of Attorney and/or co-agents serving under these powers as they would like. This can lead to agents acting contrary to one another. For example, a stock shifts a principal’s account and one agent sells shares to capitalize on the growth while the other purchases more shares in anticipation of the stock continuing to rise.
While a Power of Attorney can be valid for as little as a couple of minutes, a certain event, or after the triggering of a certain condition, it is best to only have one Durable Power of Attorney at a time to avoid this inherit confusion and lack of communication between the parties.
Why Clients Choose to have Co-Agents Serve Under a Power of Attorney
Clients choose to have co-agents serve for a variety of reasons. Sometimes it is as easy as the client wanting to ensure there will always be named agents able to serve in case something were to happen to the primary or alternative agents named under the document. An easy solution to this problem is naming numerous agents to serve in succession, rather than jointly.
However, most clients who request to have co-agents serve state that they do not want to prioritize their successor agents as it would appear to play favoritism, especially if they are naming their children to serve as their agents. Since having children serve jointly can oftentimes lead to conflict in the future, it is our recommendation that priority of appointment not be based on favoritism, but rather practically of use of the document itself that is expressed to the children now as opposed to causing arguments in the future. Common reasons for priority of appointment of some children over others include: (i) prior education or experience in the legal, financial, accounting, or medical fields; (ii) geographical proximity to the principal, and (iii) flexibility in life to properly serve as an agent under a durable power of attorney if/when the time were to come.
Disputes and Alternative Resolution Clauses
If clients are adamant on including co-agents to serve under a power of attorney, even after the above stated warnings, it is important to have a dispute resolution clause in the document itself. Common alternative resolution methods include mediation or arbitration clauses. These clauses will allow for: (1) quicker resolution, (2) cheaper resolution, and (3) private resolution.
What to do if One Agent in the POA Dies or become Legally Incapacitated?
When a POA principal appoints two or more persons to work jointly with them, difficulties occur if proper consideration has not been given as to what will happen in case one of the joint agents is unable to act due to death or legal incapacity. A clause may be included in the Attorney’s Document to provide explicitly that it will not be ended on the death or incapacity of one of the joint agents and that arrangement for a substitute agent could also proceed.
Whether you’re just starting your profession or planning for your retirement, it’s not too early to recognize how you want your financial affairs to be managed when anything happens to you and you can’t, for one reason or another, exercise control over your finances. Giving the person you trust your power of attorney to act in your best interest is essential for estate planning. Remember, the person you grant power to can make any legal decisions on your behalf and possess full legal right to do so.