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A durable power of attorney (DPOA) gives someone the authority to act on another person’s behalf, even if they become incapacitated. While this document provides important legal powers, it also comes with restrictions. Understanding these limits helps prevent misuse and ensures the agent follows legal guidelines.
Authority Ends at Death
A durable power of attorney loses its effectiveness once the person who created it, known as the principal, passes away. Many people assume the agent can continue handling affairs after death, but only an executor or personal representative appointed through a will or court can manage the estate.
No Authority Over Personal Decisions
A durable power of attorney primarily covers financial and legal matters. It does not give the agent control over personal or medical decisions unless a separate healthcare power of attorney exists.
Restrictions on Medical and Personal Care
The agent cannot:
- Decide on medical treatments unless specifically authorized
- Make end-of-life care decisions without a healthcare directive
- Choose living arrangements or personal care services
Medical and personal care decisions require separate legal documents, such as a healthcare proxy or advance directive.
Restrictions on Gifting and Asset Transfers
Most states have strict rules on gifting and transferring assets under a power of attorney. Unless the document explicitly allows it, the agent cannot give away the principal’s assets, even to family members.
Common Limitations on Financial Transactions
- Prohibitions on self-dealing, where the agent transfers assets to themselves
- Limits on making large financial gifts unless authorized
- Restrictions on changing beneficiaries on financial accounts or insurance policies
Some states require the document to state clearly that gifting is allowed. Courts closely monitor these actions to prevent fraud and financial abuse.
No Power to Override the Principal’s Wishes
The agent under a durable power of attorney must follow the principal’s instructions and act in their best interest. If the principal remains mentally capable, they can make their own decisions, even if they conflict with the agent’s actions.
Restrictions on Altering Legal Documents
The agent cannot:
- Change the principal’s legal documents
- Alter a will or trust
- Prevent the principal from managing their own affairs
If the principal disagrees with the agent’s decisions, they can revoke the power of attorney at any time while they remain competent.
Court Can Remove an Agent
A court can remove an agent if they fail to act responsibly or misuse their authority. Family members or interested parties can challenge an agent’s decisions if they suspect wrongdoing.
Reasons for Court Intervention
- Financial mismanagement or fraud
- Failure to act in the principal’s best interest
- Abuse of power for personal gain
If the agent engages in misconduct, the court can revoke their authority and appoint a guardian or conservator instead.
State-Specific Limitations
Each state has laws that govern how durable power of attorney works. Some states require specific wording for certain powers, while others impose additional safeguards.
Common State-Defined Restrictions
- Mandatory witnesses or notarization requirements
- Limits on real estate transactions without additional approvals
- Restrictions on digital asset management
State laws determine how much power an agent has and the steps needed to execute specific actions.
Financial Institutions May Reject a DPOA
Banks and financial institutions do not always accept a durable power of attorney, especially if the document appears outdated. Some institutions require a power of attorney to be signed within a certain timeframe, while others may demand additional forms or approvals.
Reasons Banks May Reject a DPOA
- Document age, as some banks refuse older powers of attorney
- Missing specific language required by the institution
- Concerns about potential fraud or abuse
If a bank refuses to honor a DPOA, legal action may be required to enforce it.
The Principal Can Set Custom Limits
A durable power of attorney does not have to grant broad authority. The principal can specify what the agent can and cannot do.
Common Restrictions Principals Can Set
- Restrict financial transactions to certain accounts
- Prohibit real estate sales without additional approvals
- Limit the agent’s authority to a specific timeframe
Customizing the document helps prevent misuse and ensures the agent only has the powers necessary to handle the principal’s affairs.
Revocation Is Always Possible
A principal can revoke a durable power of attorney as long as they remain mentally competent.
Steps to Revoke a DPOA
- Draft a written revocation statement
- Notify the agent and relevant institutions
- Destroy old copies to prevent misuse
If concerns arise about an agent’s actions, immediate revocation can prevent further issues. Legal advice may be necessary to ensure the revocation is properly documented.
Key Takeaways: Texas Durable Power of Attorney Restrictions
A durable power of attorney provides essential legal authority but comes with clear restrictions. It does not extend beyond the principal’s death, grant unlimited control, or override the principal’s own decisions. Financial institutions, state laws, and courts impose additional limitations to prevent abuse. Understanding these restrictions helps ensure a DPOA serves its intended purpose without creating legal complications.
Questions about the material contained in today’s blog post? Contact the Law Office of Bryan Fagan
If you have any questions about the material contained in today’s blog post please do not hesitate to contact the Law Office of Bryan Fagan. Our licensed estate planning attorneys offer free-of-charge consultations six days a week in person, over the phone, and via video. These consultations are a great way to learn more about the world of Texas estate planning as well as how your family’s circumstances may be impacted by the filing of a probate case.
