When we hear “durable”, we think of diamonds (they’re forever), granite (“rock-of-ages”), and maybe even your ’57 Ford pick-up with 335,000 miles on the odometer. But a power of attorney? Historically, a power of attorney has been one of the more ephemeral of legal documents which required very little to revoke. What has changed, and is it right for you?
The power of attorney can be a powerful tool because the person appointed (the “attorney-in-fact”) under a general power may have the power to stand in the shoes of the principal (the person creating the power) and transact virtually all legal matters on his or her behalf. The attorney-in-fact may be given authority to sign checks; open and close bank accounts; buy and sell securities; buy, sell, lease, or mortgage real and personal property; and even buy or sell the principal’s business!
Because of the enormous power of the attorney-in-fact, the law has traditionally made revocation a very easy process; to do so, the principal can simply announce that the power is revoked. (Although someone acting in good faith in reliance upon the power before receiving notice of revocation is usually protected.) Revocation also occurs automatically at the moment of death and until recently at the moment the principal becomes incompetent.
In the past decade a very important change has occurred in many states, including Pennsylvania; not only can powers be made to survive incompetency, but they can be made to be irrevocable at the moment of incompetency; this most “fragile” of legal documents has now been transformed into one of the most permanent or durable of documents (at least until the death of the principal when all powers of attorney terminate) simply by adding a sentence or two to the power.
This comprehensive revision in the law probably reflects our burgeoning elderly population and a need for a better method of dealing with the affairs of incompetents. Without a durable power the only path for the family of a person rendered comatose by a stroke has been to petition the court for the appointment of a guardian of the affairs of the incompetent. This can be a cumbersome, slow, and costly process and may even result in the appointment of a guardian unacceptable to the incompetent were he or she competent!
In a sense then the creation of the durable power of attorney has given each of us the ability to appoint, in advance, our own “guardian”. It is still a document which can be altered at will until the moment of incompetency, and it is relatively brief and inexpensive to prepare.
There are serious considerations to ponder before rushing to execute a durable power. Who should be entrusted to act as attorney-in-fact with such awesome control of the principal’s estate? The moment of incompetency may not be manifest since it often (usually?) occurs gradually; at what point does the power become fixed and irrevocable. If the principal regains competency, at what moment does the power become revocable again?
In selecting an attorney-in-fact, look for qualities that you would seek in an executor – trustworthiness, common sense, business judgment and similar attributes. Sit down with that person to explore his or her willingness to serve and to make certain the weighty decisions ahead will be addressed consistently with your wishes.
Though we must be aware of these issues, the durable power of attorney should be given serious consideration in any estate planning. The potential pitfalls which come with its powerful benefits can usually be avoided, which explains its rapid and very broad acceptance.
Coming next: a will that “lives”.
The power of attorney can be a powerful tool because the person appointed (the “attorney-in-fact”) under a general power may have the power to stand in the shoes of the principal (the person creating the power) and transact virtually all legal matters on his or her behalf. The attorney-in-fact may be given authority to sign checks; open and close bank accounts; buy and sell securities; buy, sell, lease, or mortgage real and personal property; and even buy or sell the principal’s business!
Because of the enormous power of the attorney-in-fact, the law has traditionally made revocation a very easy process; to do so, the principal can simply announce that the power is revoked. (Although someone acting in good faith in reliance upon the power before receiving notice of revocation is usually protected.) Revocation also occurs automatically at the moment of death and until recently at the moment the principal becomes incompetent.
In the past decade a very important change has occurred in many states, including Pennsylvania; not only can powers be made to survive incompetency, but they can be made to be irrevocable at the moment of incompetency; this most “fragile” of legal documents has now been transformed into one of the most permanent or durable of documents (at least until the death of the principal when all powers of attorney terminate) simply by adding a sentence or two to the power.
This comprehensive revision in the law probably reflects our burgeoning elderly population and a need for a better method of dealing with the affairs of incompetents. Without a durable power the only path for the family of a person rendered comatose by a stroke has been to petition the court for the appointment of a guardian of the affairs of the incompetent. This can be a cumbersome, slow, and costly process and may even result in the appointment of a guardian unacceptable to the incompetent were he or she competent!
In a sense then the creation of the durable power of attorney has given each of us the ability to appoint, in advance, our own “guardian”. It is still a document which can be altered at will until the moment of incompetency, and it is relatively brief and inexpensive to prepare.
There are serious considerations to ponder before rushing to execute a durable power. Who should be entrusted to act as attorney-in-fact with such awesome control of the principal’s estate? The moment of incompetency may not be manifest since it often (usually?) occurs gradually; at what point does the power become fixed and irrevocable. If the principal regains competency, at what moment does the power become revocable again?
In selecting an attorney-in-fact, look for qualities that you would seek in an executor – trustworthiness, common sense, business judgment and similar attributes. Sit down with that person to explore his or her willingness to serve and to make certain the weighty decisions ahead will be addressed consistently with your wishes.
Though we must be aware of these issues, the durable power of attorney should be given serious consideration in any estate planning. The potential pitfalls which come with its powerful benefits can usually be avoided, which explains its rapid and very broad acceptance.
Coming next: a will that “lives”.
– Ken Butera