In California, a durable power of attorney is a vital part of a well thought
out estate plan. The kind of power of attorney discussed is a power of
attorney for finances.
The powers enumerated in this document give your agent, or your attorney-in-fact,
power to act on your behalf over the following areas, among others:
- Real estate transactions
- Tangible personal property transactions
- Bond, share, and commodity transactions
- Financial institution transactions
- Business operating transactions
- Insurance transactions
- Retirement plan transactions
- Estate transactions
- Claims and litigation
- Personal relationships and affairs
- Benefits from military service
- Record, reports and statements
- Tax Matters
- Trust Powers ( if applicable)
California Probate Code, beginning with Section 4000 establishes the rules applicable to these transactions.
A durable power of attorney lasts beyond the principal’s incapacity,
and is not limited by time period. It lasts until the death of the principal,
it is revoked or amended.
Because of the tremendous reach of the power given the agent of a durable
power of attorney, it is extremely important to choose someone that you
trust absolutely to act in your best interest, as your agent. Many seniors
have been taken advantage of by unscrupulous family members who procured
the power of attorney after the senior was unable to understand its importance.
This is why it is so important to have this document
before you need it. Once you need one, it is often too late to legally execute
it. I describe this document as an “in case of emergency, break
glass” document. Don’t try to install a fire hose or ax in
the building once the fire has already started. You needed it there waiting
to be used!
People who are single, or young couples, are often leery about authorizing
this kind of power immediately while they are capable of handling their
affairs. In that case, they can execute a “springing” power
of attorney. The powers of the agent do not go into effect until the principal
has been adjudged incapacitated by a doctor. Then, the agent may act for
the principal. If the principal regains capacity (doctor certified), the
document lays dormant again.
The problem with this type of power of attorney is that it may take longer
to begin using it. It also limits the ability of someone to do things
for you, while for example, you are laid up in a hospital bed, but not
incapacitated. In that case, you would have to execute another power of
attorney to use immediately. However, a springing power of attorney does
limit the ability of your selected agent to act without your knowledge,
and is available in a catastrophe.
Whichever type of power-of-attorney you execute, it is necessary to have
someone who can act on your behalf in an emergency. Otherwise, they may
need to go to court to get authorization which is always expensive.