Power of Attorney – Top Southern California and San Diego Attorneys

A power of attorney is one of the strongest and most effective ways by which you can arrange for someone to take control of your affairs if you become incapacitated.

Although it’s not something people tend to think about every day, it’s actually quite common for people to become incapacitated at some point before dying, and increasingly so in today’s world where modern medicine can keep us alive for longer. Millions of Americans live with dementia, including around 5-8% of people over the age of 60. The older you get, the higher the risk becomes. And that’s not even counting things like persistent vegetative states, brain injuries, and all the other ways in which people – and not just the elderly – can become incapacitated.

That is why most complete estate plans should include a power of attorney, which will permit someone else to act on your behalf in legal and financial matters.

Most people have some reluctance to hand over their affairs to another person under any circumstances. But if you become old and begin to lose the ability to handle your own money, then this will make you a prime target for elder financial abusers – and there are a lot of those out there, waiting to prey on the vulnerable.

If you cannot handle your affairs, then someone else will take charge. The only question is whether it’s a good person or a bad person. It is far better for your money, health care decisions, and other matters to end up in the hands of someone you can trust.

What Is a Power of Attorney?

Simply put, a power of attorney is a legal document that authorizes someone else to act on your behalf. When someone makes decisions for you via a power of attorney, these decisions have all the same legal force as if you yourself had made them.

When you set up a power of attorney, you are the principal, and the party whom you select to act on your behalf is the agent, or sometimes the attorney-in-fact.
(Contrary to what the name suggests, the agent does not have to be an attorney. You can pick a relative, close friend, or other person or entity.)

The scope of the power of attorney varies, depending on what you are trying to do. You can create a general power of attorney, which will allow the agent to have essentially full authority to act on your behalf, or a limited power of attorney, which only gives them authority in certain specified matters.

There are a variety of possible matters that a power of attorney can delegate, including:

  • Health care.
  • Personal property.
  • Real estate.
  • Financial investments.
  • Gifts.

If you want to allow the agent to make decisions on your behalf even after you become incapacitated, then you will have to create what is known as a durable power of attorney. This is the same as an ordinary general or limited power of attorney, except that it contains a clause specifically stating that the power of attorney will stay in effect even after your incapacitation. Your durable power of attorney in many cases will also be a springing power of attorney; that is to say, it will not begin to take effect until after your incapacitation.

A power of attorney is very different from a will. Wills, by definition, can only take effect after you are dead, and so an ordinary will does not allow you to plan for your possible incapacitation.

While estate planning is one of the most basic functions of a power of attorney, these documents can serve other purposes too. If you want to delegate your decision-making power to someone for logistical reasons, such as handling matters you cannot be present for or do not have the time or resources to handle personally, then you may wish to consider using a power of attorney for these circumstances too. Of course, be careful about whom you give this power!

What Happens if I Don’t Have a Power of Attorney?

If you don’t have a power of attorney and you become incapacitated, then someone else will step in to control your affairs. You just won’t have any say over who it will be.

Once you are no longer mentally competent, it is too late for you to sign a power of attorney, even though the entire point of a durable power of attorney is to cover for you when you are no longer mentally competent. This might sound unfair, but it makes sense. It prevents someone with ill intent from preying on you, getting you to sign a bad power of attorney that hands all your money over to them.

In cases where an adult is unable to handle their own affairs, and no power of attorney can be found, the courts will typically create a conservatorship, in which one party will act as your conservator and make decisions for you in much the same way an agent would.

Generally, the conservator will be your spouse or other close relative. This might be the party you would have chosen, or it might not. Every family is different, and if your spouse and other close relatives are unable to serve as your conservator, then the task may fall to someone whom you may not trust to have your best interests at heart.

Matters like this are better worked out beforehand. This is why it is so important for you to set up a power of attorney right away, no matter how far away on the horizon such problems may seem. Remember, by the time you need one, it will be too late to get one.

One more thing to keep in mind: conservatorship is a process overseen by the courts. This means that the conservator will have to regularly report to the courts, and jump through a lot of other legal hoops. It also means that – like most court proceedings – your information will become a matter of public record. Most people prefer the efficiency and privacy of a power of attorney.

Choosing an Agent

The choice of who will act as your agent in a power of attorney document may be one of the most important choices you will ever make. You are, quite literally, delegating them your most basic human faculty of decision-making. In a very real sense, your life is in their hands, and we do not recommend that you make the choice lightly.

An agent has to be someone who is both competent to handle your financial affairs and trustworthy to do so. If you have doubts about someone’s trustworthiness, or their ability to act in your best interest at the expense of their own, then you should not make that person your agent. Full stop. This is not a time to worry about hurt feelings. The most important thing is making sure your life is in good hands.

Here are some other important considerations:

  • Your agent, even if not an attorney, will have to fulfill a similar role to that of an attorney in that they must advocate on your behalf. This means that they will have to be a strong communicator and effective advocate, someone who not only has your best interests at heart but has the drive and toughness to get it done.
  • Your agent should be, at the very least, reasonably competent when it comes to financial and health matters. The more they know about these things, the better.
  • Your agent will have to be on the same page with you about how to handle your affairs. Up to a point, this involves communication, but not every eventuality can be prepared for. That is why it is important to select an agent whose disposition is similar to your own, and who – in times when difficult choices have to be made – will choose a course of action similar to what you would have chosen.
  • Your agent should fully understand their responsibilities. Lack of communication on the basics is one of the simplest ways to doom a power of attorney.
  • Basic logistical matters play a role, too. Your agent should be someone in reasonably close physical proximity to where you are. They should themselves be in good health and, if possible, relatively young. No matter how well-intentioned or competent they may otherwise be, if they cannot take care of their own affairs, they probably will not have the capacity to take care of yours.

Fiduciary Duty and Conflicts of Interest: The agent in a power of attorney is a fiduciary. This means that they have the responsibility to act in the best interests of the principal. They must keep their property separate from yours and avoid any conflicts of interest. This is a high standard of care and can result in serious legal consequences, both civil and criminal, if not adequately fulfilled. If you believe that somebody has abused their fiduciary duty, you can and should hold them accountable.

Drafting, Changing, and Revoking a Power of Attorney

With the right legal help, a power of attorney document is fairly straightforward to create. In order to be valid in the state of California, the document must include the date of execution and be either signed by two witnesses or signed in the presence of a notary public – preferably both.

As with all estate planning matters, you should not consider the matter irrevocably settled once you have signed the power of attorney. Estate planning is a process that should continue for your whole life and respond to changing life circumstances. You will likely need to change your power of attorney at least once and perhaps more than once.

Generally, you won’t need to change your power of attorney when you move to a new address, but you will need to change it if you want a new agent. This could happen because the old agent has died or become incapable of fulfilling their role, or because your relationship has changed. If you have gotten a divorce, it is very important to take your ex-spouse’s name off of your power of attorney, as well as all of your accounts and other legal documents.

Alternatively, you may want to change your power of attorney to add or remove certain powers.

If you draft a new power of attorney document, then this will take precedence over any earlier one. Although you may not technically need to revoke the old power of attorney, it is still best to do this, and so you will need to create a revocation document. If you wish to revoke your power of attorney and replace it with nothing, you can do this too.

If You Are an Agent

If someone else has selected you as their agent for a power of attorney document, then you have been tasked with a momentous responsibility.

When you are acting on your principal’s behalf, you will usually need to keep the actual physical power of attorney document with you and present it to people with whom you do business in the principal’s name. For instance, if you buy or sell something on their behalf, you will need to show the power of attorney to the other party.

As mentioned above, you have a fiduciary duty to act on the principal’s best interest, and you should go to great lengths to ensure that there are no conflicts of interest and no mixing of your assets with those of the principal. Since this process can be very involved, your best bet may be to speak with an attorney if you have any questions.

The Bottom Line

A power of attorney is, at least in most cases, not a terribly complex legal document, but getting it right can be very complex indeed.
In order to get a power of attorney that works best for you and all people involved, it is best to consult with an actual lawyer.

Here at Bohm Wildish & Matsen, LLP, our firm has extensive experience in designing power of attorney documents which help our clients effectively achieve their objectives. If you are looking to create a power of attorney (and you should be), and you want one which is maximally effective, then give us a call.
In the meantime, if you wish to learn a bit more about how powers of attorney work in California, then check out the relevant sections of the Probate Code.

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