A Power of Attorney (PA) is a
document where one person, the principal, appoints another person
or persons as his agent (formerly referred to as an
"attorney-in-fact"). The document confers authority upon the agent
to perform certain acts on behalf of the principal. By statute,
all fifty states and the District of Columbia permit a principal
to create a power of attorney that survives the principal's
incapacity. Otherwise, the power of attorney terminates on the
principal's incapacity, which is when most people would want the
agent to have authority to act on their behalf.
In California PAs have been
authorized by statue since 1979. In 1994 the provisions regarding
PAs which were scattered among various statutes were consolidated.
In July, 2000, the first major
revisions to the consolidated statutes took effect. These new
provisions are found in the Probate Code which reinforces the
estate planning nature of PAs.
PAs are very important for
planning purposes. There is a significant statistical likelihood
that a person will require assistance with the management of her
affairs due to her incapacity. According to the Bureau of Census,
there is a 58% probability that a 25-year-old person will become
disabled for three months or longer at some time during his or her
life. Thus, even the very young who have assets and concerns about
management of their financial affairs should consider this
important planning tool. The issues one should plan for vary from
person to person and thus must be tailored to the client's
specific needs.
One important decision that the
principal must make is the choice of his/her agent(s). We often
spend time counseling our clients about the selection of their
agent(s). Factors to consider include:
-
is the agent trustworthy,
-
is the agent willing to serve
-
where does the agent live
-
does the person have financial
expertise
-
are there conflicts of interest
with the principal
-
if a spouse is chosen as the
agent, is there a risk of divorce
-
if a principal's child is to
serve as an agent, is there a risk of family friction
-
who will be a successor agent
if the first agent is unable or unwilling to serve.
Why not use a form? You can
purchase a short form PA for less that $10.00 or even find one
over the internet for less than$15.00 and you don't need a lawyer
to draft it. However, one of the most powerful and flexible legal
instruments in a person's estate plan should not be a "one size
fits all form. "We taylor the PA we prepare to the needs of each
of our clients.
