Setting up powers of attorney in sonoma county
Experienced santa rosa estate planning lawyer
What Is a Power of Attorney?
A power of attorney is a document which allows you to appoint a person or organization to handle your financial affairs should you become incapacitated and unable to handle your own affairs. A power of attorney can also be used if you plan on being out of the state or country for the next few weeks or months, and are trying to sell a piece of real estate, if you have been diagnosed with a degenerative disease, if you are facing an upcoming surgical procedure, or even if you have no current medical or economic concerns. While virtually any situation can benefit from the power of attorney document, there are different types of powers of attorneys which give varying levels of control to the person named.
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Different Types of Powers of Attorney
As noted, not all powers of attorney are created equal, or will equally do a specific “job.” The following are the different types of powers of attorney you could potentially choose from:
- General Power of Attorney—If you choose a general power of attorney, you are giving broad, comprehensive powers to an organization or person to act on your behalf. The person chosen in a general power of attorney may also be known as an “agent,” or an “attorney-in-fact.” Under a general power of attorney, the agent is given such powers as employing professional help, signing documents on your behalf, handling financial transactions, handling business transactions, paying bills on your behalf, settling claims, buying life insurance, operating a business and making gifts to others. If you are planning to be out of the country you might choose a general power of attorney, granting your agent the ability to handle all of these matters. While a general power of attorney could be appropriate should you become incapacitated and incapable of handling your own affairs, there might be better estate planning documents to accomplish that task. Many estate plans include a general power of attorney which will allow the named agent to handle financial transactions as well as other matters. A general power of attorney will end on your death unless you rescind the power of attorney prior to that time.
- Limited, or Special Power of Attorney—A limited or special power of attorney grants another person the power to act in your stead for a specific, limited purpose. A special power of attorney allows you to specify the exact powers you want your agent to have, such as handling a business transaction, selling property, managing real estate or collecting a debt. A limited power of attorney could also set a specific time limit on the powers given to an agent. An example of this would be if you were going to be out of the country for two weeks, and you wanted to give power of attorney to an agent of your choice to manage your rental property. When the two weeks are up, the limited power of attorney is no longer in effect.
- Health Care Power of Attorney aka Advanced Health Care Directive—When you complete a health care power of attorney you grant your agent the authority to make medical decisions for you in the event you become incapacitated. In other words, if you are unconscious, mentally incompetent or physically unable to make health care decisions on your own behalf, a health care power of attorney allows your chosen agent to make those decisions. You might be able to combine parts of your health care power of attorney and your living will into an advanced health care directive as a comprehensive solution to a potential incapacitation. A health care power of attorney is sometimes known as a “springing” power of attorney because it does not go into effect until your incapacitation. It is extremely important that the “standard” for determining incapacity and how that incapacity will trigger the power of attorney is clearly laid out in the document.
- Durable Power of Attorney—If you are concerned that mental incompetence due to an illness or accident will not keep your power of attorney in effect, you can safeguard against any potential problems by implementing a durable power of attorney. A durable power of attorney is a general, special or health care power of attorney which has a durability provision which keep the power of attorney in effect until your death unless it is rescinded during a period in which you are not incapacitated. It will be specified in the durable power of attorney that it will not go into effect until a doctor certifies you are mentally incompetent. You can name the doctor you wish to determine this competency, or you can require that two licensed physicians agree on your mental competency.
Limitations of Powers of Attorney
There are limitations of powers of attorney, no matter what type is in place. All acts undertaken by the agent must have been granted in the power of attorney. Agents are generally not permitted to be paid for acting as a power of attorney unless the documents specifically allow payment, setting out the amount and rate of the payments. Under a power of attorney, the agent may make gifts or loans of the grantor’s assets if the document specifically allows it. If the document does not specifically address gifts or loans, then this could be possible only in limited circumstances, i.e., such gifts or loans must leave you, the grantor with sufficient assets to meet your needs, and must be consistent with any gifts or loans you might have made while you were able to do so.
The agent for your power of attorney is not allowed to change or cancel any will you currently have in place and is also not allowed to pressure you into doing something you would have been unlikely to do while you were healthy. All powers of attorney terminate upon your death, and agents of a power of attorney are not above the law. Should it be found that an agent wrongfully took money or property under a power of attorney, he or she can be sued and subsequently ordered to return the money or property. Intentional abuse of a power of attorney can even bring criminal charges. So long as you are deemed mentally competent, you have the right to revoke a power of attorney at any time—and should do so if you suspect your named agent is not acting in your best interests.
The Emotional Aspect of Choosing a Power of Attorney
There is no legal requirement that your named agent be related to you and in some cases, it can be very difficult to choose an agent who is entirely trustworthy, whether or not that person is related to you. Trust is obviously a key factor when you are choosing an agent for your power of attorney. You want to choose a person who will always put your best interests first and foremost, who will never abuse the powers granted in a power of attorney, and who will always respect your wishes. An agent for a power of attorney must keep careful and accurate records of each and every transaction performed on your behalf. If you are incapacitated to the point you are unable to review periodic updates, then the agent should be directed (via your power of attorney document) to make his or her accounting to a third party of your choice.
An agent for a power of attorney may be held liable only for intentional misconduct, not for making mistakes simply because he or she did not know better. This protection is included in power of attorney documents as a method of encouraging others to accept the responsibilities which come with being an agent. Although you can certainly appoint more than one agent, asking that they either act jointly to make decisions on your behalf or act separately in making specific decisions, there can be a downside. Having multiple agents means there is the potential of disagreement between the agents. These disagreements may delay important transactions. On the other hand, having more than one agent provides a system of checks and balances, sometimes ensuring better overall decisions.
If you choose to have only one agent, it is always a good idea to have a backup, or successor agent who could take over if your original agent is injured, ill, or otherwise unable to serve as your agent. Although there is certainly an emotional aspect to choosing an agent for your power of attorney, to the extent possible, you should make your choice based on practicality. Unfortunately, there may be concerns regarding hurt feelings (choosing one child over another), but in the end, your appointed agent must be able to make decisions without procrastinating, must know how and when to ask for guidance, and must be up to the responsibility of being an agent. In many cases, decisions must be made quickly, and other relatives may question the judgment of the chosen agent. This means your agent must be emotionally able to handle a certain level of strife while making decisions on your behalf. When choosing your power of attorney agent, carefully consider all aspects of the decision prior to making your final choice, and obtain help choosing that agent from an estate planning attorney from the Gullotta Law Group.
How Powers of Attorney Impacts Estate Planning
Many estate planning attorneys feel a power of attorney is the foundation of any good estate plan. Whether you are just starting in your chosen career or you are preparing for your retirement, it is never too early to consider how you would want your affairs to be managed in the event something were to happen to you, leaving you unable to exercise control over your own finances. Granting power of attorney to a trusted spouse, sibling, adult child, close friend or attorney can give you peace of mind, knowing someone you believe will act in your best interests, will legally have the right to do so. Although having a power of attorney can be one good way to prepare for your future, there are many factors to consider when deciding the type of power of attorney you need, as well as who you will choose as agent.
Can Powers of Attorney Be Revoked?Should you decide to revoke your power of attorney—for any reason you choose—there is a process to be followed in the state of California. While you can certainly end the powers given to an agent by revoking the power of attorney, your estate planning attorney can guide you through the following steps:
- Your original power of attorney document will be checked to determine the specific requirements for revoking the document.
- Under California law, the revocation may be made by a written statement which includes the date of the original power of attorney, your name, the agent’s name and a statement which indicates you are revoking the power of attorney. You will sign the paper, and have your signature notarized.
- Your attorney will have copies of the revocation paper made; your attorney will keep a copy, you will keep a copy and a copy will be delivered to the agent.
- Along with a copy of the revocation, a notice will be prepared for the agent, and both documents will be sent by certified mail, return receipt to the original agent.
- The same process will be followed for any other people or places who had an original power of attorney on file.
- If you filed your original power of attorney with the California state income tax board, you will complete Form 3520, the Power of Attorney Declaration for the California Franchise Tax Board.
- Once you have filled out Form 3520, you will write the word “REVOKE” across the top of the first page and attach a copy of the power of attorney on file to the back of the form.
Getting the Legal Help You Need Regarding Powers of Attorney
The Gullotta Law Group places a high level of importance on effectively communicating with our clients and keeping them involved throughout the entire process. Because of this, we are able to understand your specific needs, creating a power of attorney which is tailored to your individual needs and wants. Contact Gullotta Law Group today for experienced, knowledgeable estate planning.