A durable power of attorney is given by a person to another person to act in their place given a specific set of circumstances or activating condition. If you must have a real-estate deal go through on time and you are concerned that you may not be in the area, you could give another person power to close the deal in your absence. The person who gets the power is called the agent, which is a term not unfamiliar to those who do business, and the person who gives it is called the principle. The problem is that in a normal principle/agent relationship, the agent’s power ends when the principle becomes incapacitated. This is because the principle is responsible for the agent’s actions and normally wants to reserve the right to stop the agent from doing outrageous things with their assets while they are unconscious.
However, the rise of medical technologies that can cause a person to be unconscious for extended periods of time have caused many principles to want to have agents who can act in their place while they are alive and unconscious. So, many states have created the durable power of attorney to overcome this problem. The agent’s power survives incapacity if it is “durable” and is terminated by recovery or death.
A durable power of attorney is created immediately or upon some event that causes it to become effective. Usually, the durable power of attorney becomes effective when the principle becomes incapacitated.
The power that exists in any principle/agent relationship is what is referred to in law as the “scope of the agency.” The scope of the agency defines what powers the agent has or, in other words, what decisions the principle is turning over to them. Can the agent sell the principle’s property (as in the first example), withdraw money from the principle’s accounts or pay the principle’s bills? Because many principle/agent relationships are revocable by the principle, sometimes banks will not loan money to the principle at the agent’s request, because they are worried that the principle will wake up and say that the power was never intended. So, if you want your agent to have a durable power of any kind, it is important to be specific about that power or what is again called the scope of the agency.
However, the more power the agent is given, the more like a trustee they seem to be. So there is a Goldie Locks problem of giving the durable power of agency enough express power to do what needs to be done, without giving them too much power of attorney. But, the primary reason for the creation of a durable power of attorney is to give the agent the power to make health care decisions. For many other kinds of decisions a trust is the better instrument, but again it is important to stress that you have options when you plan your estate.
Typically, the agent with the durable power of attorney is created to be able to be an advocate for the decisions that the principle has already made in the form of the advanced directive or the living will. It is vital that the person you choose to have your durable power of attorney must be someone who you feel will be able to honor your wishes about very serious matters of life and death. Moreover, it might be better to have several people who are able to do this because the hardship of following through on some of the more life and death aspects of a living will make it easier to have a group of people do it, because they will be able to give each other support.
By: Ronald Hudkins
Posts Tagged ‘Assets’
Durable Power of Attorney – "Scope of the Agency"
December 19th, 2009Do You Really Need A Divorce Attorney?
December 11th, 2009
If you are in the situation of going through a divorce or perhaps your spouse has already filed for a divorce, you may want to consider getting a divorce attorney. This is not so much for the complexities of the filings and paperwork that will need to be done, but more so from the aspect of protecting yourself.
You are also likely to have many questions about possible outcomes and how they will affect you. A good divorce lawyer can answer those questions and put you in a much more advantageous position in the divorce proceedings. Even if you expect your situation to be pretty straight forward, perhaps even uncontested divorce, it is interesting to note how quickly people (like your spouse) can change their mindset when there is money or assets to be had as a result of the divorce.
Naturally you have the option to represent yourself in your own divorce case. But this is not a good recommendation and is not in your best interests. Especially if there are assets or children involved in the divorce, you will definitely want a divorce attorney to represent you.
Another excellent reason to have yourself represented by a good divorce lawyer is that there may be support involved, otherwise known as alimony. The divorce laws vary widely from state to state, so the advice you get from your friend in another state may not apply in your state. Note that alimony, also known as spousal support, is different from child support, and takes into account how much money you make compared with your spouse, and each of your abilities to earn income and maintain the standard of living that was established during your time of marriage.
Alimony can be awarded for a specified period of time or an indefinite period of time, and this decision is based on the particular circumstances of each spouse. The amount of alimony can be reviewed if there are significant changes in the income or situation of either spouse. But be aware that if spousal support is waived, then the spouse who gave up the spousal support cannot come back and ask for it again in the future.
Yet another reason for having a good divorce attorney is to protect any pension or retirement accounts you may have. These are typically considered “marital property” and can be divided during a divorce. Although the court system will attempt to be fair in the division of money and assets, especially with pension and retirement accounts, a good divorce attorney will fight for your rights and make sure as much as possible is done to your benefit. This aspect in itself can more than pay for the costs of a divorce lawyer.
By: Jon Arnold
What is Power of Attorney?
December 8th, 2009
Power of Attorney is a legal document where one person authorizes another to act on his/her behalf. It allows that authorized person to manage business and/or financial affairs when one person is no longer able to do so. It may be required due to illness, overseas travel or mental incapacity.
Why is it important to organise a Power of Attorney? Should you be considered incompetent to deal with your finances – you need somebody else to be authorised to deal with your affairs. A Power of Attorney document allows you to choose the person, with defined authority and limits if desired, the power to protect, or re-arrange, your assets.
The person named in a Power of Attorney to act on your behalf is referred to as your “agent” or “attorney-in-fact.” With a valid Power of Attorney, your agent can take any action permitted in the document. Often your agent must present the actual document to invoke the power.
If you do not have a Power of Attorney and become unable to manage your personal or business affairs, it may become necessary for a court to appoint one or more people to act on your behalf. Usually referred to as guardians, conservators, or committees. If a court proceeding is required then you may not have the ability to choose the person who will act for you.
By executing a Power of Attorney for Finances (also referred to as a Durable Power of Attorney for Finances) you can decide who you want to make decisions about your legal and financial matters. You can be very specific about what actions you are authorizing your partner (or agent) to make, including which accounts he/she has access to and the types of decisions he/she can make.
A Power of Attorney for Health Care allows decisions to be made specifically on what kind of treatment the person wants, based on their medical condition.
A Living Will in some ways duplicates the information in the Power of Attorney for Health Care. It is a separate document that lets your family members know what type of care you do or do not want to receive should you become terminally ill or comatosed. It can also cover situations in which a person may survive but is not capable of making their own medical decisions.
It can be a directive stating that there is to be no heroic measures to keep the person alive when there is no realistic prospect of any meaningful recovery.
An Enduring Power of Attorney is a legal document authorizing a named person or people to act on your behalf. Subject to certain conditions it continues in force until death.
Guardianship is a legal relationship whereby a probate court gives a person (the guardian) the power to make personal decisions for another (the ward). A family member or a friend can initiate the proceedings by filing a petition in the probate court where the person lives. A medical examination by a licensed doctor may be necessary to establish the person’s condition. A court of law will then determine whether that person is unable to meet the essential requirements for his/her health and safety.
As long as you are alive you have the power to revoke the Power of Attorney. To do this you must contact your attorney-in-fact to advise that the Power of Attorney has been revoked.
You can also specify a date that the Power of Attorney will expire.
A Power of Attorney is also important for unmarried couples, who live together, when a partner becomes incapacitated and unable to make decisions. When this occurs the law usually assigns the incapacitated person’s next of kin as the decision maker. With a Power of Attorney, unmarried couples can give their partners the power to make decisions.
By: Gay Redmile