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Layperson Can Get Power of Attorney

September 29, 1988|JEFFREY S. KLEIN

The durable power of attorney is an odd-sounding legal device, but one you should know about. In my last two columns, I wrote about the durable power of attorney for health care, which allows you to designate someone to make medical decisions in the event you are incapacitated.

But there is another, equally important kind of durable power of attorney. It is used to designate an agent to act on your behalf and manage your business, financial or other personal affairs.

Temporary Power

But first you should know about a conventional power of attorney, which has been around for years. It is a legal document used to appoint someone to handle your affairs. It is frequently used to give someone temporary power, such as when you are out of town.

For example, if you listed your home for sale, but left the country on vacation, you could use a conventional power of attorney to appoint someone to sell your house on your behalf.

In the standard form, you would be called the principal. The person you designate, called the attorney-in-fact in legalese, could sign in your stead the necessary legal paper work needed to complete the transaction.

The conventional power of attorney terminates upon the death or incapacity of the principal, or on the expiration date set forth in the document.

On the other hand, and this is an important point, the durable power of attorney does not terminate upon a principal's incapacity. In fact, it is a relatively recent legal invention designed to allow you to appoint someone to act on your behalf if you do become incapacitated.

This allows you to completely avoid the expense and inconvenience of a court conservatorship proceeding. The court won't have to select someone to act on your behalf, because you will already have done so by executing the durable power of attorney.

The powers granted are very broad. Unless you limit them, the standard statutory form allows your agent to: sell your home or other property, deposit and withdraw money from your bank accounts, borrow money using your property as security for the loan, open your safe-deposit box, operate your business, cash checks made out to you, file tax returns and even make estate planning decisions, such as setting up a trust. (These powers are defined in Sections 2460 through 2473 of the California Civil Code, which you can find in any law library.)

With such broad powers, it's extremely important that you select someone you trust completely to be the attorney-in-fact. Often it will be a family member, but if there's any doubt about finding someone you trust with all your wordly possessions, perhaps this legal device is not for you. That person will have what is called a "fiduciary" duty to you to act in good faith, but if he or she has run off with your money or sold your favorite heirloom, a lawsuit to prove the breach of duty will be long and expensive. And may not bring your heirloom or money back.

Two Ways to Begin

There are basically two ways to have the power commence. You can provide that it will take effect immediately upon signing--for instance if you are about to undergo major surgery, or you've been diagnosed with a degenerative disease. Or you can state that it only takes effect if you become incapacitated, as certified by a medical doctor.

In any event, a power of attorney can be revoked at any time, although there are formalities required, such as the proper form, witnesses and notarization. And be careful: If you revoke the power of attorney but fail to inform third parties--such as a bank--they may still rely on the instructions of your attorney-in-fact without any liability for doing so.

"The Power of Attorney Book," written by Denis Clifford and published by Nolo Press in Berkeley, is an excellent resource and includes tear-out forms. You should also consult your own attorney about how best to use this legal document in your situation.

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