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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.
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
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.
- 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
Click here for more information about a committee you select to determine incapacity to trigger the Power of Attorney to become effective.
- 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:
- The power of attorney is either currently effective
or Springing. Each has its own risks as set out above.
- 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.
- You may also have to record a revocation with the County
Recorder where you have real property.
- 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
- 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.
- This power of attorney gives the agent almost
unlimited powers to make gifts on your behalf.
- 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.
- 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.
- 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.
- 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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