Several types of powers of attorney exist, but likely one of the more commonly known and used powers of attorney is the general durable power of attorney. The general durable power of attorney allows you to name a power of attorney, also known at an attorney-in-fact or agent (i.e., the person you’ve chosen to act on your behalf upon temporary or permanent disability), to make financial and business decisions for you. For example, your power of attorney may be able to write checks out of your bank account to pay your mortgage or utility bill, file your income tax returns, sign your car’s certificate of title, deal with your real estate, etc. With so much control and authority, however, it is normal to fear potential exploitation, vulnerability, and loss of control to the designated power of attorney. However, there are ways to help alleviate such fears while still ensuring that you are choosing in advance, while you are competently and legally able, a person to help take care of your finances, without resorting to a forced court ordered conservatorship.
Trust. It is important to choose a power of attorney you trust. While people can certainly change for the worse or better as time progresses, make the best decision you can based on the information you have about the person at the time you create your general durable power of attorney. And just because the person is the oldest child, your oldest friend, or even your spouse, does not mean that person is automatically a good choice to be your power of attorney. Being a power of attorney is a job and a great responsibility. Choose someone you would trust with your entire life savings and who will do what is right on your behalf, even when no one is looking. While powers of attorney have a fiduciary responsibility not to use your assets for their own benefit, there is not necessarily someone watching over them with every stroke of their pen on your checking account.
Successors. It could be difficult to name one trusted power of attorney, let alone two or three as back-ups. However, naming a primary power of attorney, as well as successor powers of attorneys to serve if your first choice is unable or unwilling to serve, provides you safety and comfort in knowing you are still in control over who has control over your property. And remember, as life changes, change your general durable power of attorney. If you have the capacity, you retain the absolute and sole right to designate your power of attorney.
No Online Forms – Talk to an Attorney. Yes, LegalZoom and countless other online sources you can find by using your internet search bar will direct you to a general durable power of attorney “form.” But do you know all the powers that the general durable power of attorney is granting to your attorney-in-fact? Do you understand on that “form” when your power of attorneys’ authority becomes effective? While you may want your power of attorney to be able to cash in insurance policies for your medical expenses, you may not want them to be able to change the life insurance beneficiary designations. Or maybe you want to change the definition of how it is decided that you are deemed disabled. Online forms are often very broad so as to operate in many states and offer almost an unlimited number of powers to cover literally every and any situation imaginable. However, each state has its own set of specific laws regarding powers of attorney. And, unless you understand what powers should, and more importantly should not, be included in a general durable power of attorney, you are putting yourself at risk.
For more information, contact estate planning partner Shaina A. Case.