Power of Attorney Mistakes: EDU #2637

Full analysis

Jim Saulnier and co-host Chris Stein walk through five common power-of-attorney mistakes drawn from an article by estate planning attorney Allison Lee, supplemented by insights from now-retired estate planning attorney Peter Scott. The episode is practical elder-law territory: most POAs in circulation contain errors that will cause them to be rejected at the worst possible moment, and the fixes are straightforward if you act before a crisis.

What was covered

• Failure to name an alternate agent. Jim Saulnier stressed that your primary agent has no legal obligation to serve — illness, divorce, or a change of heart can leave them unavailable. Without a named backup, a court appoints someone, which may mean a paid stranger who doesn't know you.

• The "springing" POA problem. A springing POA only takes effect after two physicians certify incapacity. Saulnier said retired estate planning attorney Peter Scott changed his mind on this: if you don't trust someone while you're healthy and watching your accounts, you shouldn't trust them after you're declared incapacitated either. Springing powers also cause real operational delays — and some states don't recognize them at all.

• Missing or overly broad gifting authority. Saulnier used his own mother's POA as the example: no gifting language was included, meaning his sister (the named agent) could not legally continue paying for her own children's college tuition — a pattern their mother had long intended — without appearing to breach her fiduciary duty to her mother. The fix: specify who the agent may gift to, the dollar amounts or caps, and whether the agent may gift to themselves or their own children. Saulnier also noted that if you regularly make charitable donations or use qualified charitable distributions (QCDs) — direct transfers from an IRA to charity that reduce taxable income — none of that continues under a POA unless you grant the power explicitly.

• Not notifying old agents and financial institutions after a change. When you update a POA, the prior agent should be told in writing, and every bank or financial institution holding the old document needs to swap it out. Saulnier noted that some states (Colorado among them, around 2010) passed laws requiring financial institutions to honor a POA regardless of age — but Peter Scott said the "good cause" exception is so broad it effectively invites institutions to demand a court order anyway, a costly hurdle for families.

• Boilerplate real estate language that title companies won't accept. Peter Scott flagged this as one of the two biggest POA failures he encountered in practice. Generic language doesn't identify specific properties, and title companies refuse it. The solution is to name each property by both its common mailing address and its full legal description (the county's formal plot record). Saulnier described two clients whose POAs came from the identical software: one attorney left the real estate section as boilerplate; the other replaced it with an addendum listing the legal descriptions of all properties.

Notable claims & predictions

• Jim Saulnier: "Your agent is under no legal obligation to act on your behalf." Someone you named a decade ago can simply decline when the time comes, leaving the decision to a court.

• Peter Scott (as relayed by Saulnier): "If you don't trust that person while you are cognitively still here, how are you going to trust them after two doctors have said you're incapacitated?" — the core argument against springing powers.

• Saulnier on gifting: A POA agent is a fiduciary; courts have ruled it is not in the principal's interest for an agent to give money away. That means gifts stop automatically — annual cash gifts to family, charitable donations, college payments — unless the document explicitly grants that authority.

• Saulnier on stale POAs: Colorado passed a law requiring financial institutions to honor a POA regardless of age, but Peter Scott said the "good cause" exception is so broad "I could fly a 747 through it" — institutions routinely demand a court order rather than accept an old document.

• Chris Stein on over-restriction: Locking a POA down with too many conditions can make it functionally useless. Stein recommended giving the agent a workable document and supplementing it with a separate written letter of instruction explaining your intentions — that letter is not part of the legal document but gives the agent real guidance.

Fact check

Springing POAs requiring two physicians. Saulnier describes the standard trigger as certification by two doctors. In practice the required number of physicians varies by state and by how the document is drafted — some POAs require only one physician, some require a court finding. The two-doctor standard is common but not universal. This is an oversimplification, not a falsehood, but readers should verify what their own state and document require.

"Some states don't recognize springing agencies." This is accurate in the sense that state POA statutes vary widely. A handful of states restrict or discourage springing powers; others recognize them with specific procedural requirements. Saulnier's statement is broadly correct.

The Colorado law requiring institutions to honor POAs regardless of age. Saulnier attributes this to Peter Scott and dates it to around 2010. Colorado did substantially update its Uniform Power of Attorney Act around that period. The characterization of a broad "good cause" exception is plausible and consistent with how similar statutes are drafted nationally, though Saulnier and Stein both acknowledge they are not attorneys and that Scott's "loophole" comment may reflect conditions that have since been tightened. Treat this as directionally accurate but not a precise legal citation.

Gifting stops under a POA without explicit authority. This is well-established fiduciary law: an agent cannot give a principal's assets away without specific authorization because doing so is presumptively not in the principal's interest. The claim is correct.

No claims rise to the level of clearly false.

Why this matters for you

• Pull out your POA and check these five things now, while you can act. Does it name an alternate agent? Does it include explicit gifting authority — specifying who may receive gifts, in what amounts, and whether the agent may give to themselves or their own children? Does the real estate section identify each property by its full legal description, not just a mailing address? If you can't answer yes to all three, the document may fail when it's needed most.

• If you make annual cash gifts, charitable donations, or use QCDs from an IRA, your POA must say so explicitly — otherwise those patterns stop the moment the agent takes over, with potential tax and estate consequences.

• Notify every financial institution when you update a POA. Don't assume the "all prior documents are revoked" boilerplate does the job; the old form may still be on file at your bank or brokerage, and a stale document in circulation is a fraud risk.

• If your POA is more than five to ten years old, have an attorney review it. Saulnier's point about institutions refusing old documents — and the legal gray zone around state laws that nominally require acceptance — makes an aging POA a live operational risk, not just a theoretical one. The review is a one-time cost; a court-supervised guardianship proceeding is not.