Sunday, October 07, 2012

tip for preparing your Power of Attorney

First, if you are an adult with children and/or property, please take the time to have two documents prepared by an attorney - a Last Will and Testament and a Power of Attorney. People become disabled or die unexpectedly so please do not wait until you are old to make important decisions and codify them in writing.  You probably also want to add a Living Will or Healthcare Directive.

Second, if you already have these documents, remember to look at them every few years and make changes as needed with your attorney's assistance.

I am not an attorney but as a title insurance agent I read a lot of wills and power of attorney documents.  After reading so many I've given thought to my own documents and made some changes.   The one big change I'd like to talk about in this post concerns powers given to another person to manage your affairs.

This is on my mind today as a loved one is in the hospital and we just reviewed important documents.

When you ask your attorney to prepare a Power of Attorney document, it will likely be a General Power of Attorney which gives broad powers to your agent/attorney in fact to pretty much do just about anything with your property.  Presumably this person will act in your best interest and I think you might presume that they will do so only when you have given permission, right?

What if you are perfectly capable of making decisions but your family or this person decides that they want to make a decision for you without your knowledge?

We had a case in our office recently in which an elderly lady living in an assisted care facility owned a country cottage, one that she loved according to her family.  She had no children.  She had executed a General Power of Attorney document giving power to her nephew. The nephew listed the cottage for sale and signed a sales contract without ever discussing it with his aunt. His aunt is lucid, just too old to live alone, has no children with whom she might reside. Had she considered that he might make major decisions on her behalf without discussing them with her?  Probably not.

When we received the title order and saw a the Power of Attorney document we asked if his aunt was capable of signing the deed. That's when he revealed that she was unaware of the sale but that she was capable. He said she really loved the cottage and thought that selling it would upset her. We insisted that he get her permission for the sale and that she sign the deed herself.  She consented and we closed the transaction.  I have no idea how that conversation went, but she might have felt compelled to complete it since the transaction had moved so far along.  What if she had been contemplating one last stay in the cottage or just looked forward to maybe spending an afternoon or two there?  I can imagine that, can't you?

At any rate, this could be avoided by creating a Power of Attorney which only goes into effect after one or two [you choose the number] doctors write a letter stating that you are mentally incapable of making decisions.  This way you have a document in place in case you are still alive but incapable of managing your affairs but while you are alive and still capable you are not giving broad powers to another person to act in your stead. You have given power but limited it to the time when you are incapable to manage things yourself.

Again, I raise this as something for you to consider when you work with your attorney in creating these very important documents.  I have noticed over time that very few Power of Attorney documents contain this limitation.  I'm not sure why, but I think it's a good idea and so my personal document does contain such a limitation.

No comments: