Most people have heard of a power of attorney, and most have some vague idea of what it does and why such a document is used. As a San Jose Medi-Cal attorney, the problem that I often encounter is that many people have a power of attorney that won’t allow their agent to do what must be done in some cases, or it gives their agent powers to do things that the principal was never aware of.
The power of attorney is often considered the most powerful document in your set of estate planning documents. Don’t take it lightly. You need to fully understand it.
What Does the Power of Attorney Accomplish?
The power of attorney allows the appointed person to act on your behalf to make financial decisions for you. That’s why a power of attorney is sometimes called a “financial” power of attorney to distinguish it from a healthcare power of attorney. It will generally allow an appointed person to take control of your assets for your benefit, and the person given that control is bound by fiduciary standards to act in your best interest.
What is a Durable Power of Attorney?
All powers of attorney end upon the death of the person who has granted the powers to someone else. If a power of attorney is “durable,” that means that it is still in force although you become incapacitated. Most people want their power of attorney to be durable so that their appointed agent can act for them even if they later become incapacitated. “Non-durable” powers of attorney, which are rarely used today, were designed to protect a person during incapacity by making the document automatically invalid when the person was incapacitated and unable to revoke the document.
Who are the Parties to the Power of Attorney?
The person signing the power of attorney is called the “principal.” If it’s your power of attorney, then you’re the principal. The person who is given the power to act for you is called the “agent.” The agent might be your spouse or it might be an adult child or other person close to you that you trust.
What Types of Powers of Attorney Exist?
There are general and special (limited) powers of attorney, and each of those could be either a military, contingent, springing, or presently effective power of attorney. Most powers of attorney will be general in nature to allow the agent to exercise several different powers, and most will also be presently effective so that the agent is empowered to act as soon as the document is signed and notarized. This shows the importance of appointing an agent you absolutely trust.
Agent or Co-Agents?
The issue that can arise when naming co-agents is whether you allow them to operate independently or they must agree on everything. If they operate independently, is each agent aware of what the other is doing? If they must act together, who acts as the tie-breaker if your agents disagree?
My preference is to use one agent at a time, but also name successor agents to follow after the initial agent in the event that the initial agent resigns, dies, becomes incapacitated, or declines or otherwise fails to serve.
Sometimes it does make sense to have co-agents. In particular, I like this approach when a spouse is the named agent, but the principal realizes that their spouse already has some signs of dementia or early Alzheimer’s. The appointment of a co-agent in this circumstance gives greater protection to the principal and often avoids the uncomfortable situation of having to address an agent’s mental capacity and asking that person to resign as the agent for their spouse. If a trusted daughter or son has already been appointed as a co-agent who can serve independently, it can make the transition easier.
Does Your Power of Attorney Include the Right Powers?
An effective power of attorney for elder law purposes is significantly different than other powers of attorney. The powers needed in the document vary with the principal’s age and health condition so that a power of attorney established years ago may not be desirable for that same individual today. When it comes to Medi-Cal planning, a “standard” power of attorney established years ago may actually prohibit an agent from taking the necessary steps to protect the person’s assets.
Every person age 18 or over should have a power of attorney in place. If you need a power of attorney, or if you want to know if your existing power of attorney will be sufficient for Medi-Cal planning purposes, give my office a call so that we can set a time to review your needs.