Financial powers of attorney

Financial Powers of Attorney

Planning for your possible incapacity, especially when people are living longer than they ever have before, is an important part of your estate plan.  Whether you have a will or a trust, you also need powers of attorney–there are two kinds generally used in California.  One is the financial power of attorney, used for financial decisions on your behalf, and the other is the health care power of attorney, used only for medical decisions on your behalf.  This post examines financial powers of attorney, and the post following this will look at health care powers of attorney.

A durable general power of attorney is a general instrument that confers sweeping financial and business powers and permits a wide range of actions on behalf of the principal. (“Durable” means it survives your incapacity–if it’s not durable, it will lose its power if you later lose capacity.)

Often, the intent is to confer the maximum authority allowable. The agent you choose is authorized to (financially speaking) do nearly everything that the principal (you, the signer of the power of attorney) could do personally do for himself. However, a power of attorney can also be a specific power that authorizes the agent to act for a specific purpose.

In the absence of a validly appointed agent, only a court-appointed conservator has the authority to make financial and business decisions on behalf of the principal. This conservatorship process is, like probate, expensive and time-consuming, so having a durable power of attorney saves you time and money.

Even after a power of attorney is operative, the principal can still act for himself or herself. The principal and the Agent have concurrent authority to act on behalf of the principal.  However, if a conservatorship is granted and supervised by the court, the person will no longer be able to act for himself or herself.

Disputes can arise as to whether the triggering mechanism, i.e. the principal’s incapacity, actually occurred. Incapacity can mean many things, and it’s best to really understand the triggering mechanism in your power of attorney.  Is it when two licensed physicians agree you’re disabled?  Should family members or friends or successor trustees be included in deciding when you’re disabled?  Does it include times when you’re away for an extended period of time, or are missing?

There are three main ways a durable general power of attorney is revoked: a power of attorney is revoked by the death of the principal (despite popular belief to the contrary); if the power of attorney was recorded in the county recorder’s office, then it should only be revoked during the principal’s lifetime by the filing of a written revocation with the county recorder; and an unrecorded power of attorney may be revoked by specific written revocation, physical act of revocation, or in any manner specified in the document itself.

Further, if Medicaid/Medi-Cal planning for nursing home care may be an issue in your future, be sure your financial power of attorney and living trust are coordinated and allow the kind of gift planning (including gifts to the agent) necessary to accomplish Medi-Cal planning without having to file petitions in court.

How can I help?

If you have questions about having the right financial durable power of attorney, or including the right powers, give me a call at (888) 503-7615 or an email here.  I’m also happy to meet for a free consultation regarding these issues, or your other questions regarding revocable living trusts, health care powers of attorney, living wills, wills, guardianships, probate, trust administration, special needs trusts, trust contests, will contests, trustee removal or elder abuse.  We have offices in Pasadena, Chino Hills and downtown Los Angeles, and serve clients in Los Angeles, San Bernardino and Riverside counties.