DURABLE FINANCIAL POWER OF ATTORNEY
On the ___ day of __________________, 20____ I, __________________, the principal, of __________________, State of __________________, hereby designate __________________, of __________________, State of __________________, my attorney-in-fact (hereinafter my “attorney-in-fact”), to act as initialed below, in my name, in my stead and for my benefit, hereby revoking any and all financial powers of attorney I may have executed in the past.
(Choose the applicable paragraph by placing your initials in the preceding space)
________ – A. I grant my attorney-in-fact the powers set forth herein immediately upon the execution of this document. These powers shall not be affected by any subsequent disability or incapacity I may experience in the future.
________ – B. I grant my attorney-in-fact the powers set forth herein only when it has been determined in writing, by my attending physician, that I am unable to properly handle my financial affairs.
POWERS OF ATTORNEY-IN-FACT
My attorney-in-fact shall exercise powers in my best interests and for my welfare, as a fiduciary. My attorney-in-fact shall have the following powers:
(Choose the applicable power(s) by placing your initials in the preceding space)
________ BANKING – To receive and deposit funds in any financial institution, and to withdraw funds by check or otherwise to pay for goods, services, and any other personal and business expenses for my benefit. If necessary to effect my attorney-in-fact’s powers, my attorney-in-fact is authorized to execute any document required to be signed by such banking institution.
________ SAFE DEPOSIT BOX – To have access at any time or times to any safe-deposit box rented by me or to which I may have access, wheresoever located, including drilling, if necessary, and to remove all or any part of the contents thereof, and to surrender or relinquish said safe-deposit box; and any institution in which any such safe-deposit box may be located shall not incur any liability to me or my estate as a result of permitting my attorney-in-fact to exercise this power.
_________ LENDING OR BORROWING – To make loans in my name; to borrow money in my name, individually or jointly with others; to give promissory notes or other obligations therefor; and to deposit or mortgage as collateral or for security for the payment thereof any or all of my securities, real estate, personal property, or other property of whatever nature and wherever situated, held by me personally or in trust for my benefit.
________ GOVERNMENT BENEFITS – To apply for and receive any government benefits for which I may be eligible or become eligible, including but not limited to, Social Security, Medicare and Medicaid.
________ RETIREMENT PLAN – To contribute to, select payment option of, roll-over, and receive benefits of any retirement plan or IRA I may own, except my attorney-in-fact shall not have power to change the beneficiary of any of my retirement plans or IRAs.
________ TAXES – To complete and sign any local, state and federal tax returns on my behalf, pay any taxes and assessments due and receive credits and refunds owed to me and to sign any tax agency documents necessary to effectuate these powers.
________ INSURANCE – To purchase, pay premiums and make claims on life, health, automobile and homeowners’ insurance on my behalf, except my attorney-in-fact shall not have the power to cash in or change the beneficiary of any life insurance policy.
________ REAL ESTATE – To acquire, purchase, exchange, lease, grant options to sell, and sell and convey real property, or any interests therein, on such terms and conditions, including credit arrangements, as my attorney-in-fact shall deem proper; to execute, acknowledge and deliver, under seal or otherwise, any and all assignments, transfers, deeds, papers, documents or instruments which my attorney-in-fact shall deem necessary in connection therewith.
________ PERSONAL PROPERTY – To acquire, purchase, exchange, lease, grant options to sell, and sell and convey personal property, or any interests therein, on such terms and conditions, including credit arrangements, as my attorney-in-fact shall deem proper; to execute, acknowledge and deliver, under seal or otherwise, any and all assignments, transfers, titles, papers, documents or instruments which my attorney-in-fact shall deem necessary in connection therewith; to purchase, sell or otherwise dispose of, assign, transfer and convey shares of stock, bonds, securities and other personal property now or hereafter belonging to me, whether standing in my name or otherwise, and wherever situated.
Etc, Etc, Etc………
I’m an attorney of over 25 years in private practice. I do NOT practice Estate Planning or Probate law. I practice only in the State of Texas. The laws of your state may be different, your personal situation will always be important in making these sorts of legal decisions and for that reason you need to consult with a qualified attorney in your area. This article is NOT IN ANY WAY, SHAPE OR FORM to be construed as legal advice- guys I hate to say it, but you know I have to. In short, I don’t know what the Hell I am talking about and you probably shouldn’t read this or listen to a thing I have to say! And certainly, don’t act or rely on any of it. You aren’t my clients and I’m not your lawyer. Now then…
A fairly straight forward and important document that everyone needs as part of their planning is the Power of Attorney or POA. The easiest way to think about a power of attorney is that it clones the person giving it for legal purposes allowing someone else to engage in transactions or decisions that would normally be reserved for the person granting the power of attorney alone. Those decisions are typically related to either financial transactions- buying or selling a house, selling stock, closing a bank account or medical decisions such as consenting to a particular type of treatment or choosing a physician or facility for care. However, you can grant a power of attorney to anyone to do anything you could legally do yourself.
Powers of attorney can be very broad or quite specific and narrow. You can give someone a power of attorney to make any financial decision you might make yourself (A General Power of Attorney) or you could limit it to being able to handle the sale of a particular piece of property (Special or Limited Power of Attorney). Often, there is a broad list of decisions included in the document that whoever is granted the Power of Attorney could make and the person granting the powers simply initials the boxes for the specific ones they want to grant or simply “All”. You can have different persons holding powers of attorney for different things- your brother the accountant might not be the right person to hold your medical power of attorney- your sister, the nurse, might be a better choice. By the same token, the accountant might be much better suited to decide when to cash in a particular investment. Careful consideration of the skills, aptitude and general trustworthiness of the person you’re considering granting a power of attorney to is a major part of the decision.
You can apply a time limit to a Power of Attorney- you might choose to do this if you anticipated being out of the country, if a certain transaction is taking place somewhere or at a time when it’s difficult for you to be there or while recovering from a pre-planned surgery during which you would be unable to act easily for yourself. You can simply specify in the document a date on which it would expire. Since the power of attorney is such a powerful document- think worst case scenario- the person you granted the Financial Power of Attorney to becomes a Crack Addict overnight and decides that cashing out your 401k would provide a hell of a good time….that I typically prepare them so that they are only operational following a physicians certification that the grantor is unable to make proper decisions for themselves. This is generally known as a Durable Power of Attorney as it survives incapacity and may also be known as a Springing Durable Power of Attorney as it only “springs into action” when triggered. A Power of Attorney can then remain dormant for decades and only become operative when it’s truly needed, leaving less room for mischief but still able to provide it’s benefits when most needed. When the POA holder thinks there is a problem because dad has paid the same electric bill four times this month, they can ask for a physician consult and a determination about his mental fitness and assuming there is a problem, activate the POA.
Powers of Attorney can of course be revoked. After all, you are authorizing someone else to make decisions for you, but as the grantor, YOU are the ultimate decision maker as to who has what authority over your affairs. The tricky part of revocations is notice- the problem being the person holding the POA can present what appears to be a very (and WAS) official and legally binding document to a Third Party, say a bank- the bank will act on that authority, justifiably so, unless they have notice that the POA has been revoked. So, in the event that you need to revoke a power of attorney, the revocation needs to be immediately communicated, in WRITING to those that might receive and rely on it- your bank, broker, doctor, attorney etc…
Powers of attorney are only valid as long as the grantor is alive. This is critically important to understand. Many people seem to think a power of attorney will allow someone to act even after they have passed, they mistakenly believe they can avoid having a Will or Probate in this way. Powers of attorney do not survive your death. Period. There are ways to avoid Probate but a power of attorney is not one of them. There is also an important difference between General and Durable Powers of Attorney to be aware of. A General Power of Attorney often will expire if the grantor becomes incapacitated whereas a Durable Power of Attorney will not and often is in fact activated by the grantors incapacity as we discussed above. This does vary from state to state though and you need to consult with a knowledgeable attorney as to your needs and wants. A Power of Attorney is often drafted because we understand that we may become disabled and cannot act for ourselves- the same can happen to the people you give the POA to, so, make sure that you appoint a secondary holder of the Power of Attorney in the event that your POA holder becomes disabled themselves.
The power of attorney is a very powerful and useful legal document. It can greatly simplify decision making at a potentially very stressful time and avoid disputes (costly in both money and goodwill) about who has the authority to make decisions for you and whether or not they are “what you really want”. Legal, medical and financial decisions are a very important part of our lives- not the most important of course, but they certainly can impact our enjoyment of the truly important things, for that reason the Power of Attorney is a necessary part of preparedness.