Powers of Attorney
A Power of Attorney is an essential incapacity planning tool that lets you designate an agent to make financial decisions on your behalf.
A power of attorney gives written authorization for another person to make decisions on your behalf. This document allows you to name a family member, friend, or professional fiduciary as your power of attorney agent. This gives that person the legal authority to make decisions on your behalf. A Power of Attorney document can address financial decisions, medical decisions, or both.
Taking the time to create power of attorney documents can help you and your loved ones immensely. While nobody wants to think about becoming incapacitated, creating a power of attorney can spare you and your loved ones anxiety and stress. Power of Attorney documents also allow you to ensure your wishes are known and empowers you to select the best person for the job.
WHAT GOES INTO A POWER OF ATTORNEY DOCUMENT?
As the creator of the power of attorney document, you can make the document as limited or broad as you choose. The appointed representative is called your “agent”, or your “attorney-in-fact”. For example, you might only give your agent power to handle banking and other financial institution transactions. Alternatively, you may opt to grant your agent power to handle all financial transactions on your behalf.
LIMITED POWER OF ATTORNEY
In a limited power of attorney, the attorney-in-fact can exercise limited authority in a particular type of transaction. For example, if you wanted to purchase property in another state, you could create a power of attorney document appointing another person to sign the legal documents in order to purchase the property. In this type of power of attorney document, the agreement terminates when the transaction is complete. Thus, the power of attorney would immediately terminate after the attorney-in-fact signs the real estate paperwork as specified in the document.
DURABLE POWER OF ATTORNEY
The durable power attorney gives the attorney-in-fact much more power than in a limited power of attorney. A durable power of attorney can give the attorney-in-fact extensive power in a certain area of the creator’s affairs. A well-written durable power of attorney will specify which powers are being given to the attorney-in-fact. A durable power of attorney does not automatically terminate after a single transaction. The creator of the power of attorney has a right to revoke the document at any time. Durable powers of attorney can come into effect immediately upon signing and remain in effect after the creator becomes incapacitated.
SPRINGING POWER OF ATTORNEY
A springing power of attorney is quite similar to a durable power of attorney, with one important difference. In a springing power of attorney, the power only takes effect when a particular event happens. For example, a springing power of attorney might only come into effect when the principal becomes incapacitated.
Springing power of attorneys can be advantageous when the creator of the power of attorney does not want the power to take effect immediately. Typically, springing power of attorney documents include a phrase such as “This power of attorney shall become effective upon the principal’s incapacity,” or something similar.
GENERAL POWER OF ATTORNEY
A general power of attorney is a type of power of attorney that gives the principle-in-fact, or representative, broad authority to make decisions. The attorney-in-fact can make decisions regarding every type of legal matter with the exception of making healthcare decisions. A general power of attorney is sometimes referred to as a financial power of attorney.
WHAT ARE THE ELEMENTS OF A LEGALLY VALID CALIFORNIA POWER OF ATTORNEY?
The California Probate Code requires that the principal or creator of the power of attorney document have legal capacity. The law requires that the principal is of sound mind and age 18 or older when they create the power of attorney document. The principal must sign the power of attorney document before a notary public or two witnesses.
If the principal is authorizing a power of attorney to handle real estate matters, they should notarize the document to make it available for recording. Witnesses who signed the power of attorney document can be anyone except the appointed agent.
Power of attorney documents are effective immediately unless the document specifies otherwise. Many California residents include language stating that the power of attorney will become effective upon the incapacity of the principal. Usually, this type of language is included in the SPECIAL INSTRUCTIONS portion of the form.
In California, power of attorney forms are automatically considered durable power of attorney documents unless the principal crosses out the sentence stating that the power of attorney will continue even though he or she becomes incapacitated.
WHEN IS A POWER OF ATTORNEY BENEFICIAL?
Creating a power of attorney is an essential part of California estate planning. A power of attorney allows your designated agent to access accounts that cannot be titled in your trust, or assets you may choose not to title in the name of your trust. For example, retirement accounts like IRAs cannot be titled in a trust. A power of attorney allows your agent to access these accounts if you become incapacitated, without needing to petition the court for a conservatorship. Creating a power of attorney saves your estate and loved ones time, money, and stress.
OUR CALIFORNIA LAWYERS CAN HELP
If you are interested in drafting a power of attorney document, our attorneys can help. At the Law Offices of Daniel A. Hunt, we place a high priority on offering our clients helpful, knowledgeable, and honest legal advice. We can provide legal counsel as to the best type of power of attorney for you and your loved ones. Contact our law firm today to schedule your initial consultation at our Sacramento, Folsom, or Roseville offices.