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What Kind of Power of Attorney is Best?
Jan L. Warner & Jan Collins

Question: My wife and I have read quite a bit lately about the need for powers of attorney, but we are confused about whether we need a general power of attorney or a durable power of attorney. Also, we have three children and would like to appoint all of them to act for us if we become incapacitated, but not before. Is this possible?

Answer: First of all, a primer on powers of attorney is in order. When you sign a power of attorney, you appoint someone you trust to act for you under specific circumstances and to engage in acts that are authorized by the terms of the document. This creates an agency relationship that is governed by the law of your state of residence. It is important to understand that based on the language of the document, you can make the grant of authority to your agent either broad or limited.

If you don’t voluntarily create this agency relationship but become incapacitated, a probate or surrogate court will appoint a person to act for you whom you might not have chosen. If this is the case, the court may well limit the authority of the guardian or conservator and reduce their ability to plan for you. That’s why it’s preferable to sign a well-drafted durable power of attorney instead of taking your chances that a court will carry out your wishes.

All powers of attorney terminate upon the death of the person who signs it; however, if your power of attorney is not “durable,” it will terminate immediately upon your incapacity – just when you need it most. That’s why the “magic language” creating “durability” is so important. Generally, this language is as simple as, “I intend that this power of attorney not be affected by, and will survive, any future incapacity.” With those words, your general power of attorney becomes a “durable power of attorney.”

By making sure your document is drafted properly, you can control when the power of attorney takes effect. You can make if effective immediately or effective at the time you become physically or mentally incapacitated. If effective upon incapacity, it is called a “springing durable power of attorney.” In this event, you should define the exact events that make you incapacitated, and who will make that decision for you. While springing documents may give you peace of mind, third parties who rely on these documents are generally more comfortable with immediate powers of attorney.

As far as whom you choose to make your decisions should you be unable to do so, we believe it’s a mistake to choose three people to do one job. Any time you have government by committee, you have gridlock. And gridlock means that someone will have to resort to the courts to make your decisions.

We believe it’s better to appoint one person as agent, and require input from the others should gifts or other self-serving acts be authorized by the document. For example, if you wish your agent to be able to make gifts during your incapacity, you can limit the gifts in amount, require that the majority of your then-living children agree to the gift in writing, and require that if a gift is made to one child, the other children receive an equal and simultaneous gift.

Since powers of attorney are much like shoes, it’s important that your document be drafted to fit your specifications and needs and not be a “one-size-fits-all” form that, in actuality, fits no one and will leave you in the lurch when you need it the most.

It’s important to record your document with the public records office of the county in which you reside, and to give copies -- while you’re still in good shape -- to those with whom you do business. It’s not a good idea to spring the power of attorney on a bank after you become incapacitated.

Lastly, if you revoke or modify your power of attorney, make sure to record the revocation or modification and also put it in the hands of all entities to whom you provided your power of attorney in the first place. Do yourself a favor and hire a knowledgeable lawyer to prepare your documents.

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