Info - Durable Power of Attorney
Note: This is general legal information intended only to inform the reader. If you need legal advice, you should consult an attorney. See entire Disclaimer.
1. Your Name: identifies you, the person creating the durable power of attorney (the "principal"), and starts with the first name. The current official name, as it appears on the driver license for example, should be listed here. If other names were used in financial records which would be the subject of this durable power of attorney, they should also be listed here. This would make your attorney-in-fact's job much easier. Examples: Paul Cooper; aka, Paul Blake; aka, Paul Cooper-Blake.
2. Your Gender is generally needed for the purpose of using the proper pronoun in the document.
3. Your Residence Address not only further identifies you, the principal, but is required as the law differs in each state. Your durable power of attorney will be in compliance with the law of the state indicated here. In general, the principal's state is the state where his/her main legal residence is; that is the state where he/she lives or he/she has most contacts with by voting there, owning property there, having bank accounts there, etc.
4. The Attorney-in-Fact, sometimes called agent, is the person you, the principal, authorize to represent you in your financial matters. This is the most important decision you have to make for the purpose of creating the durable power of attorney. The person you choose does not have to be an attorney. You can choose any competent adult you trust and is willing to serve. In order to avoid unnecessary conflicts, it may be wise to name the same person as successor trustee (if you created a living trust), executor of your will, and attorney-in-fact of a durable power of attorney for finances. When choosing such a person, the following are some factors which should be considered: trustworthiness, relationship with you, his/her willingness to serve, his/her skills, and his/her residence. For example, your spouse or an adult child may be a good choice.
The durable power of attorney can be revoked, and the attorney-in-fact changed, at any time before the principal becomes incapacitated. You can name more than one person to serve in the same time, but it is usually a good idea to name only one, in order to avoid unnecessary conflicts and delays in resolving your financial matters. By contrast, as always, naming an alternate (2nd choice) is advisable here as well, as there is always the possibility that the 1st choice might not be able or willing to serve. For both, first and second choice, list the correct name and complete address. If you are not sure, ask the attorney-in-fact you want to designate. Example: John Smith, 234 Norman St., Apt. 100, Irvine, CA, 92555.
5. Authorization Limits. Here, the principal, the person creating the durable power of attorney indicates what powers he/she is giving to the attorney-in-fact. The authority, can be broader or narrower, depending on the principal's situation and his/her intent or wishes. A list of common powers is given for the principal to select from. Of course, all choices can be selected, or the principal may wish to limit attorney-in-fact's authority, by selecting only some powers. When selecting the powers, a serious thought has to be given not only to what powers need to be transferred now, but also what powers will the attorney-in-fact be needing in the future, in order for him to properly manage principal's finances.
Here is a list of common powers, with explanations attached. You can choose to give your attorney-in-fact authority over your:
a. real property; e.g., house, land, etc; if this power is granted, the attorney-in-fact may pay the mortgage, buy insurance for your property, rent it, sell it, etc. Some people are reluctant to give such broad power to the attorney-in-fact over their home in which they leave. They don't want their home to be sold under any circumstances. You are presented here with the option to exclude the power to sell your home; your attorney-in-fact will only have full powers over your other real property. If you choose to exclude your home, indicate what its address is by making the appropriate selection.
One more thing; if you choose to grant any real property powers, the durable power of attorney will have to be recorded. It is a simple process, and related instructions will be attached to the durable power of attorney.
Note: by checking the box next to any of the following items (b-l), you give full control over that particular item to your attorney-in-fact. Basically, what you could do with that property or right, he/she will now be able to do.
b. personal property; this refers to tangible personal property: books, furniture, a car, etc.
c. bank accounts; with this power, your attorney-in-fact, can deposit or withdraw funds from your accounts, pay your bills, open new accounts, etc. It should be noted that some financial institutions have their own power of attorney form; if your bank has one, you should fill that out too; it would facilitate your attorney-in-fact's interaction with that bank.
e. all taxes; you may authorize your attorney-in-fact to act for your benefit on all local, state, and federal tax related matters; he/she will be able to file and pay your taxes, hire an accountant if he needs help, etc.
f. living expenses; here, you can give authority to your attorney-in-fact to spend what is necessary to maintain your, and your family's, standard of living.
g. business management; if you own a business, you may want to give your attorney-in-fact authority to operate your business. His/her authority is a function of the form of business you own; generally, he/she will have more authority if you own a sole proprietorship, and less if you are a partner in a partnership, own a LLC with someone else, or you are just one of the shareholders of a corporation. The business agreements you have with your partners, co-owners of a LLC, or the other shareholders, cannot be replaced by the durable power of attorney; they limit your attorney-in-fact's power.
h. estates and trusts; in case you will receive property as the beneficiary of a will or a trust, your attorney-in-fact may claim that property; he/she may also disclaim it, if for example, accepting it would increase your estate taxes.
i. transfer of property to a living trust; as part of your estate plan, you may have created a living trust to avoid probate (recommended); your attorney-in-fact does not have power over the trust property; but you may give him here the power to transfer more property to that trust when he deems appropriate. Also, as it was mentioned at #5 in this text, it is generally wise to name the same person as successor trustee of your living trust, and attorney-in-fact of your durable power of attorney. This would avoid unnecessary conflicts.
j. legal actions; seriously consider giving your attorney-in-fact the power to pursue your interests (by hiring a licensed attorney, etc) in any situation involving government agencies, or the courts; even if you do not have such problems now, this would enable your attorney-in-fact to act when the need arises.
k. government benefits; here, you may give your attorney-in-fact the power to apply for, and collect government benefits (Social Security, etc), on your behalf.
l. pets care; you can even authorize your attorney-in-fact to spend money, in order to properly care for your pets.
m. donations and gifts can be made by your attorney-in-fact, if you grant him/her this authority; you may want to grant this power to ensure that your favorite charity continues to be supported, to allow for the possibility of saving estate taxes, or simply to help a family member, or someone else in need. This is a very important authority. You can refine it by carefully considering the options below:
Note. If the above list of powers does not sufficiently enable you to express your intent or wishes, you should consult an attorney. You may be in need of a more customized power of attorney.
6. Reports? You may indicate here if your attorney-in-fact should prepare reports for someone who would check on his/her activity. If yes, indicate the person's name and address, as well as how often the reports should be prepared and sent (e.g., semiannually).
7. Delegation Allowed? Giving your attorney-in-fact the authority to delegate to someone else his responsibilities ensures that your affaires are taken care of when he/she is temporarily unavailable. If your attorney-in-fact resigns or is permanently unavailable, your second choice named earlier at # 5 will take over.
8. Personal Benefit Permitted? Is your intent to give permission to your attorney-in-fact to personally benefit from transactions he/she conducts in your name? Generally, an affirmative answer is a good choice only if your attorney-in-fact is someone with whom your finances and interests are already commingled (e.g., your spouse, a son, etc).
9. Mixed Assets? Do you want your attorney-in-fact to mix your assets with his/her? As above at #9, generally, an affirmative answer is a good choice only if your attorney-in-fact is someone with whom your finances and interests are already commingled (e.g., your spouse, a son, etc).
10. Compensation? Should your attorney-in-fact be paid for his services? It is wise to discuss this with your attorney-in-fact. In general, family members are not compensated. If you choose to pay your attorney-in-fact, indicate how much (e.g., $500/month, etc).
11. Conservator or Guardian? To account for the unlikely possibility that your durable power of attorney will be successfully challenged in court by someone, it is generally wise to indicate here that your attorney-in-fact should be the conservator or guardian of your finances. You can do so by selecting "Yes." Usually, the court gives serious consideration to your wish as indicated here.
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