Three Lessons on Durable Powers of Attorney

Durable powers of attorney are an essential element in a succession plan complete, allowing a continuous financial incapacity. Under a durable power of Attorney, an attorney in fact makes financial decisions on behalf of the principal. In fact, the Attorney General may administer large and broad powers. Conversely, the powers granted by a durable power of attorney may be limited to specific assets or powers. Accordingly, the level of control in fact given the Attorney General should reflect the specific requirements of the estate and comfort of the principal with a general grant of authority. In this article, the author taught three lessons on effective execution and implementation of lasting powers of attorney.

First lesson: why so I need one now?

The legality of lasting powers of Attorney arising from the Statute of the Agency. Principles of agency law, an individual whose capacity can give an officer powers - to contract, to represent the principal or to revoke or amend a trust, for example. In the case of a non-sustainable power, the Agency ends on the inability of the principal. Sustainable powers survive failure, but the principal must have the ability at run time to perform a valid authority.   Therefore, the execution of a durable power of Attorney for financial management must be performed before a failure.

To wait until it becomes unable to consistently express its wishes with respect to financial management decisions is too late, and a same court-appointed may be necessary. What the trustee successor named in my trust, or the executor of my will? They would be able to intervene? Since the principal does not die of incapacity, only an attorney in fact designated under a properly executed proxy may intervene to make decisions of financial management. Last minute sustainable of power of attorney executed in disability would not survive a challenge judicial, however dear or damage the result.

The second lesson: consider making immediately effective power

Often, imprudent estate planners will execute "durable powers of Attorney, sees" which will become effective on the inability of the principal. Incapacity is determined according to a test in the power, as a decision made by a physician or a given court decision. But who wants to go through the expense, difficulty and uncertainty to initiate legal proceedings to determine disability? One of the objectives of estate is not planning to avoid delays and unnecessary costs? In addition, doctors frequently not hesitate to make decisions for incapacitated due to the liability that they may face.

In most cases, a better strategy would be to run an immediately effective durable power of Attorney, which gives an attorney in fact the power to make decisions on behalf of the principal without any finding of incapacity. Many fear an immediately effective proxy, reasoning that no one should receive such power over their financial affairs unless they are completely incompetent. If they in fact have such a lack of confidence for the Attorney General, why they are running a proxy in the first place? One would think that even more confidence would be necessary when the principal is incompetent and has little influence on the Attorney in fact. Finally, simple measures can be taken to avoid disasters before disability. Consider sealing of a copy of the durable power of Attorney in an envelope labeled "do not open until my inability." In addition to the oral instructions, this can help avoid the scenario of a runaway Attorney in fact who uses the proxy to access the financial accounts prior to disability.

Lesson 3: what powers expected the Attorney in fact be given?

The powers of a Prosecutor in fact dependent on the desires of the main and the particular concerns that stem from the types of assets held. The durable power of Attorney must be coordinated with health advance directive, trust and the will to ensure that they not contradict each other. Namely, the Prosecutor should in fact have the power to create trusts? To cancel or modify existing trusts? The Attorney General would in fact have a power to himself or others donate? These powers can help ensure that the preparation for the care of long-term (medical) or tax planning can take place even after the failure.   Before executing a power of Attorney, individuals should be fully informed powers they grant and the possible consequences of these scanning of power concessions. In all cases, it is best to consult a lawyer who can provide advice on specific risks.

Conclusion

Durable powers of attorney are one of five basic estate planning documents discussed in this article series. Unlike a will or trust, which deals primarily with the decisions taken to death, the deals with lasting power of Attorney estate planning and financial management of life issues. People should be aware of the risk waiting to run the proxy; the dangers of the "sees" powers. the range of powers which may be given to the lawyer of fact; and risks associated with a scan of the authority of the Attorney General in fact grants.   --

This article is intended to provide general information about estate planning strategies and should be relied upon as a substitute for legal advice from a qualified attorney. The Treasury regulations require a limitation of liability, to the extent that the article is, tax issues, it is not intended to be used and cannot be used by a taxpayer for the purpose of avoiding penalties that may be imposed by the Act.

John c. Martin is an estates, trust and probate lawyer in Menlo Park. For more ideas, visit its Web site: http://www.johncmartinlaw.com