MARC  WEISSMAN

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FOSTER CITY
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Durable Power of Attorney

This Article is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal adviser.

Background:

In planning for your estate, one contingency we must anticipate is your possible future disability. You are more likely to become disabled than to pass away, at any given age.

If you should become disabled, and not have someone previously appointed to care for your financial matters, a court supervised conservatorship may become necessary. This becomes very cumbersome and expensive, the costs being paid from your assets.

A solution is a Power of Attorney which will authorize another person to act on your behalf. [A regular Power of Attorney becomes invalid on your subsequent disability, just when it is needed the most. A Durable Power of Attorney survives incapacity, although it expires on death.]

We use a form which provides the widest scope of powers available to be given to your agent. However, it is those broad powers that present the risk of abuse. Any powers which give you concern can be eliminated.

In general, a Power of Attorney will allow your agent to do anything with all of your property which you might do. The listing of powers is quite broad. In fact, it is so broad that it might be considered a "license to steal" for your agent. No Court supervision, delays, or costs (or protection) are incurred to allow the agent to act.

A Durable Power of Attorney is a very powerful legal document and can be very dangerous if misused.

The powers typically granted are extensive. You should be willing to trust your agent with an unlimited blank check.

There are two types of Durable Powers of Attorney: one which is immediately effective; and one which becomes effective only on the happening of a future event. The second type is dormant until that event occurs; then it "springs" to life.

  1. Springing Power means that until the future event occurs, the agent has no authority to act. That future event might be the certification of your incapacity by two licensed doctors. Personally, I do not trust all doctors. There are bound to be 2 doctors somewhere in the state who can be "bought" or duped to sign a certificate of incapacity. If you name your personal doctor as the sole person to decide on your capacity, many problems are eliminated, but a new one arises. He will eventually die or retire, or you may move away, making that particular physician unavailable, causing the Power of Attorney to become useless.

    Click here for more information about a committee you select to determine incapacity to trigger the Power of Attorney to become effective.

  2. The other type is immediately effective. It does not come into effect only upon your incapacity, but is legally effective now. Once you have given it to your agent, he has virtually unlimited powers over your property and other legal affairs.

The following are the parts of the Durable Power of Attorney that may present the greatest risks:

  1. The power of attorney is either currently effective or Springing. Each has its own risks as set out above.

  2. The power of attorney can be revoked by you at any time, but as a practical matter, it may be difficult to revoke. You will have to give written notice of revocation to all third parties who have received copies, and retrieve the original and all copies from your agent.

  3. You may also have to record a revocation with the County Recorder where you have real property.

  4. This power of attorney gives the agent unlimitedpowers to pay himself or herself for carrying out your power of attorney and representing you, and unlimited powers to pay others to help in implementing the power of attorney.

  5. This power of attorney gives your agent a release from liability, except for willful misconduct or gross negligence, and gives guaranties to third parties that they can rely on your agent's authority.

  6. This power of attorney gives the agent almost unlimited powers to make gifts on your behalf.

  7. This power of attorney nominates as conservator the same person as the agent. Although this reduces the likelihood of conflicts, it also reduces the possibility that an independent conservator would be appointed to question the actions of your agent.

  8. A "fresh" power is more likely to be honored than one which is many years old. This is a good reason to regularly re-execute a form.

  9. Not all institutions will honor a Durable Power of Attorney. Some banks, title companies, and others will insist that their form is used. IF YOU KNOW OF AN UPCOMING NEED FOR A POWER OF ATTORNEY FOR A PARTICULAR INSTITUTION, GET THEIR FORM, JUST TO BE SAFE.

  10. The Power of Attorney will not necessarily be honored in all states, although we have tried to make it so.

One issue is who should hold onto the form. Since it is a "license to steal," perhaps it should not be given to your agent until it is needed. The problem is that if you are incapacitated, you will not be able to make that decision. Perhaps a close friend or relative could hold the form until it is needed by the agent.

As you can see, there are no perfect answers to the problem of planning for incapacity.

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