By Robert C. Gerhard III, Certified Elder Law Attorney
A properly prepared power of attorney (POA) is one of the most effective tools for safeguarding your finances, healthcare decisions, and overall well-being in the event of incapacity. In Pennsylvania, POA documents must meet specific legal requirements to be valid. Without proper legal guidance, an improperly drafted POA may not work when it matters most.
While a POA can often help you avoid guardianship, not all documents provide equal protection. Poorly drafted or outdated forms may be rejected by banks, challenged in court, or fail to grant your agent the powers you intended. With clear planning and legal guidance, however, a POA can offer peace of mind and preserve your autonomy.
For advice tailored to your situation, we invite you to contact our office for a consultation. Our attorneys can help ensure your POA reflects your wishes, complies with Pennsylvania law, and protects your interests now and in the future.
Disclaimer: We recommend that you receive ongoing legal advice from an elder law attorney before executing or relying on a power of attorney in Pennsylvania. If you have questions or wish to secure our services, please contact Gerhard & Gerhard, P.C.
Table of Contents
How to Set Up Financial Power of Attorney in Pennsylvania?
Establishing a financial power of attorney is an important step when planning for the future. In Pennsylvania, there are specific considerations to keep in mind to ensure your document is valid, enforceable, and tailored to your needs. Here’s what to know before getting started:
- Client Must Call: Our office policy is that the person granting the POA must contact our office directly so we can confirm they have the capacity to sign legal documents.
- Choose Wisely: Your agent should be both trustworthy and capable, as both qualities are essential for handling financial matters responsibly.
- Confirm and Back Up: Make sure your chosen agent is willing to serve, and name at least one alternate to step in if needed.
- Read and Ask: Review the draft POA carefully, and don’t hesitate to ask questions. Your attorney can explain every part so you understand the document and how it will work.
- Act Early: You must sign your POA while you’re still mentally capable; waiting too long may require a court-appointed guardian.
- Tailor the Powers: Work with your attorney to include only the powers you need and decide when the POA should take effect.
- Avoid Online Risks: Online forms can fail to meet Pennsylvania’s legal standards and can be rejected by financial institutions if they are invalid. A professionally drafted POA document ensures it will work when needed.
Read The Full Guide: How to Get Financial POA in Pennsylvania
What a Limited POA Covers in Pennsylvania
In some cases, a limited power of attorney (POA) can provide a quick and free way to authorize someone to act on your behalf for a specific bank or financial institution. While helpful, these documents come with important limitations. Here’s what you should know:
- Available Through Financial Institutions: Many banks and brokerage firms offer limited POA forms at no cost for use with their own accounts.
- Scope Is Narrow: A limited POA only applies to the institution where it was issued; it doesn’t authorize actions elsewhere.
- Best Used as a Supplement: These documents can be useful in limited circumstances, but they complement, not replace, a general, durable financial POA.
- Limitations Are Significant: Limited POAs generally don’t allow for changes to beneficiary designations, real estate transactions, or Medicaid planning.
- Review Before Signing: Always read the entire document and ensure it aligns with your broader estate plan.
Establishing a limited POA can help protect your interests. However, for broader, long-term planning, especially around nursing home costs, read our Ultimate Guide to Medicaid Estate Recovery in Pennsylvania.
Do You Need a Lawyer to Create a Power of Attorney
Creating a financial power of attorney requires legal guidance to ensure that the document meets Pennsylvania’s legal standards and will be effective when you need it most. Here’s why legal guidance matters:
- Pennsylvania Law Applies: Your POA must comply with current Pennsylvania law, or it may be deemed invalid when needed.
- Required Pages Must Be Included: The document must contain the state’s mandated Notice page and Agent’s Acknowledgment page; omitting these can render it useless.
- Execution Requirements Matter: The POA must be signed while the person has legal capacity, in front of a Notary Public, and with two witnesses who are not named as agents.
- Powers Must Be Clear: Without the correct legal language, your agent’s authority may be limited or unenforceable. Specificity is particularly important when including authority regarding gifting and changing beneficiary designations.
- Online Forms Carry Risk: Generic POAs often omit key elements or use outdated language, creating a situation where there is a lack of specific authority to take steps to engage in Medicaid planning or otherwise use the document for valid estate planning.
- Legal Drafting Adds Protection: A lawyer can tailor your POA, clarify the powers granted, and offer testimony if the document is ever challenged.
Read The Full Guide: Becoming A Financial Power of Attorney: Why Should I Hire a Lawyer?
Financial Power of Attorney: What To Ask My Lawyer?
A power of attorney is a grant of authority with serious legal and personal implications. Here are some of the topics you should be sure to discuss with your lawyer when planning a financial power of attorney.
- Clarify How Authority Is Shared: Your lawyer can help you decide whether agents should act jointly, independently, or in sequence. Each option has a distinct impact.
- Consider Long-Term Flexibility: Naming alternate agents and planning for future incapacity ensures your POA works when you need it most.
- Understand Advanced Planning Options: Some POAs allow for estate or Medicaid planning, but with that power comes risk.
- Explore Protective Measures: Concerned about misuse? Safeguards can be built into your POA to preserve your autonomy and require oversight.
- Think Practically About Use and Storage: You’ll need to consider when and how to share your POA and where to keep the original.
Read The Full Guide: What Should I Ask My Lawyer about Financial Power of Attorney?
Can a POA Send Money to Themselves?
In Pennsylvania, an agent under a power of attorney cannot legally transfer money to themselves unless your POA document clearly grants that authority. This protection is in place to prevent abuse and ensure your wishes are honored.
- Clear Language Is Required: Without specific permission in the POA, self-gifting is a breach of fiduciary duty and may lead to legal consequences, this is true even for a spouse.
- Some Gifts May Be Permitted: In certain situations, such as Medicaid planning or supporting a spouse or child, it may be appropriate to allow limited gifting or to provide for “family support and maintenance.” If you wish to grant such authority, it should be specifically stated in the POA.
- Your Intentions Matter: You can authorize annual holiday or educational gifts, but only if those gifts are permitted in your POA document.
- Duties Still Apply: Even with gifting authority, your agent must act in your best interest, maintain your estate plan, and take into account your needs and any public benefits planning.
- A Lawyer Can Add Protection: An estate planning attorney can tailor your POA to include or restrict gifting, set oversight requirements, and reduce the risk of misuse.
Read The Full Guide: Can a Power of Attorney Transfer Money to Themselves?
Multiple POAs in One Family: What to Consider
A power of attorney document can be drafted with built-in protections to help prevent abuse and ensure accountability. Whether you’re naming one agent or more than one, here are some key considerations:
- Choose the Right Person: Name the individual you trust most to act wisely and seek professional help when needed. Don’t make the mistake of automatically choosing your oldest child or the most available relative.
- Allow Co-Agents If Appropriate: You can name two agents to serve together, requiring both to sign for certain actions. This can help reduce the risk of unilateral decision-making. Alternatively you can name two agents and give them authority to act separately and individually without the consent of the other. This second arrangement works when the agents get along and communicate well with each other.
- Plan for Delegation and Oversight: Your POA can authorize co-agents to divide duties for efficiency, such as allowing one to pay bills while both retain access to monitor the account.
- Require Financial Transparency: Your POA can direct your agent to share financial records with specific individuals upon request, offering reassurance to siblings or family members.
- Permit Court Review: Your lawyer can include a clause granting a trusted individual the right to request a formal accounting through the court, if concerns arise.
- Guardianship as a Last Resort: If no one trustworthy is available, it may be safer to forgo signing a POA. Guardianship is more costly, but it offers court oversight that may prevent financial abuse. In some cases a revocable trust with a professional trustee might serve as an option for disability planning, potentially avoiding the need for a guardian.
Read The Full Guide: Should you Name Two People to Serve as Power of Attorney?
How Long Does Power of Attorney Last in PA?
A financial power of attorney does not expire just because time has passed, but there are situations where it may need to be updated. Here’s what you should know:
- No Expiration by Time Alone: A POA does not automatically become invalid just because it’s old. However, institutions may hesitate to accept very dated documents.
- Updates Are Encouraged: While older POAs may still be legally valid, updating your document every 5 to 10 years ensures compliance with current laws and improves acceptance by banks and title companies.
- You Can Revoke It: A POA can be revoked at any time if you are of sound mind. If the agent is still acting, it’s important to notify them and any relevant third parties of the change. That notice should be sent in writing.
- Ends at Death: A POA is no longer effective after your death. From that point, your executor handles financial matters under your will.
- May Be Invalid From the Start: A POA can be void from the beginning if it was improperly executed, didn’t comply with Pennsylvania law, or was signed without proper mental capacity.
- Court Can Step In: If an agent mismanages finances, a court may remove them. In some cases, the court may appoint a guardian and terminate the POA.
- Agent Unavailable: If your agent dies, resigns, or is unable to act and no successor is named, the POA ends. Naming a reliable backup is a key protection.
Read The Full Guide: How Long is a Power of Attorney Good for in Pennsylvania?
POA vs. Guardianship in Pennsylvania: What’s the Difference?
Planning ahead with a power of attorney can often help you avoid guardianship proceedings altogether. Understanding the key differences between these two tools is essential to making informed decisions about your future care.
- Cost and Complexity: A POA is generally part of an affordable estate plan. Guardianship, by contrast, is a court process that can cost thousands to initiate and maintain.
- Who Makes the Choice: With a POA, you choose your agent. In guardianship, a court decides who manages your affairs, and that person may or may not be a family member.
- Scope of Authority: POAs often come in two forms: financial and healthcare. Guardianship divides these roles into guardian of the person (health decisions) and guardian of the estate (financial matters).
- Level of Oversight: A POA operates without court supervision unless challenged. Guardians must file annual reports and often need court approval for financial actions.
- When Each Applies: A POA must be signed while you still have legal capacity. Guardianship is used when capacity is lost and no valid POA exists or when the named agent is unavailable, unfit, or disputed.
- Flexibility and Control: A POA allows you to limit your agent’s compensation, define duties, and build in safeguards. Guardians must seek court permission for compensation and spending beyond income.
- Alternatives When No POA Exists: If you don’t have a trusted individual to serve, options like naming a corporate trustee or using a bank’s POA services may help avoid guardianship.
Read The Full Guide: Power of Attorney vs. Guardianship in Pennsylvania
Get Trusted Power of Attorney Guidance from Gerhard & Gerhard, P.C.
Creating a power of attorney is one of the most important steps you can take to protect your future, but it’s not a document to approach lightly. At Gerhard & Gerhard, P.C., we provide personalized legal guidance to help ensure your POA is valid, enforceable, and aligned with your wishes.
Whether you’re planning ahead or updating an existing document, our experienced attorneys are here to help. Contact us today to schedule a consultation and gain peace of mind knowing your advance planning is in place.
