Durable Power of Attorney
What Is a Durable Power of Attorney?
Generally speaking, a Power of Attorney gives to someone you trust, the right to act on your behalf. The one giving the power is often referred to as the Principal, while the one receiving the power is referred to as the Agent or Attorney in Fact.
What Does “Durable” Stand For?
Historically the law required that a power of attorney automatically expire when the person who gave the power became incompetent. Recent law however makes it possible to include a provision in the document which allows the power to continue during incompetency – thus the term “durable”.
How Is Durability A Benefit?
To answer that, let’s play “what if”. What if you meet with misfortune and become incompetent from accident or illness. If you had not given a Durable Power of Attorney (while you were competent), no one would be available to immediately act on your behalf.
Your only remedy would be to resort to the courts. The family would most likely hire a lawyer to commence guardianship/conservatorship proceedings in the Probate Court. This would entail a petition, notices to living relatives, medical records, possible Doctor’s testimony, possible challenges of interested parties, hearings, appointment of a fiduciary, periodic accountings to the court and, of course, EXPENSE.
On the other hand, you can take advantage of the present law now, while you are competent and capable (the prudent way). Through a Durable Power of Attorney tailored to your wants and needs and naming the person(s) you trust to handle your affairs, that person can conduct your business immediately upon your disability. No red tape! No Court!
Is It Only Useable If I’m Disabled?
It’s up to you. There are people who intentionally do not want the Power to begin until some event occurs like disability (“springing durable power of attorney”). Others want the Power to start as soon as it is signed. In the latter case, both you and your agent would be able to conduct your business simultaneously. Such may be preferable where, for instance, it is difficult for you to get out of the house. Or, you want a close relative to handle matters here in Michigan while you are in Florida for the winter. You can imagine that there are unlimited reasons that may apply depending upon your circumstances and the level of trust involved.
What Powers Can I Give? Are There Limitations?
You can give to your agent almost limitless power to handle your business and financial affairs depending on your intentions (from the broadest to the most restrictive). The attorney will cover this with you so as to tailor the instrument to your wants and needs.
Under the law however, no matter what powers are given, the agent you appoint must act in good faith and on your behalf. As such, he or she is held to legal standards of a “fiduciary” (someone in a position of trust). The agent cannot use this trust authority to benefit himself or herself without authority, or commit acts which are contrary to the intentions expressed in the document. In fact, things like running off with your money or property in violation of the power would not only subject the agent to civil liability, but to the criminal laws as well.
While broad authority is generally desirable under close trust relationships, there are those powers that people generally exclude. Most do not want their agent making a will or trust, changing the beneficiary on an insurance policy, giving gifts to others, or entering into a contract of marriage (hit my head/woke up married to Fred). The nature and extent of the power however is really up to you. At Tyler and Tyler, we go over a check list with the client to ascertain your wishes based upon your individual circumstances and intentions.
Do I Lose Rights or Control Of My Property?
Absolutely Not! The durable power of attorney only allows the agent to conduct your business at the same time that you may be conducting your business, or, while you are disabled. The agent does not have control of your property as would be the case where, for instance, a conservator is appointed by a Court. The agent is only allowed to conduct your business as you would conduct it and in accordance with the powers granted. In fact, you can immediately revoke the Durable Power of Attorney at any time merely by providing written notice of its termination. An agent who receives such notice is forever prohibited by law from exercising any further power unless such power is restored by you.
Am I Allowed More Than One Agent?
Yes, as many as you like. But this comes down to what you intend under your particular circumstances (some prefer spouse and one or more children for instance). If you have more than one agent, you can allow them to act independently or require that they act together at all times (the latter is often cumbersome however but is still preferred by some people). You can also name a successor agent whose powers would not start until the agent you named became unwilling or unable to act.
What Are The Liabilities and Responsibilities Of The Agent?
These are the questions often asked by the designated agents (usually relatives). The broad answer is that if the agent acts in good faith, for and on behalf of the principal, is not grossly negligent (i.e. lost money on a hot tip at the track), and does not exceed the powers given (such as running off with the money), there should be little concern for liability. In terms of responsibility, it is advisable to keep records of transactions. Overall, exercise good judgment with the best interests of the principal in mind.
When Does A Durable Power Of Attorney Expire ?
A Durable Power of Attorney automatically expires on the death of the principal, or as stated above, at the time the Agent receives notice from the Principal that such power has been revoked.
Summary
The Durable Power of Attorney is an economical sensible tool designed for most everyone. It can save time and provide convenience in having your business conducted for you depending upon your particular circumstances. At the same time, during its effectiveness, you retain full rights and control of your property and retain the ability to terminate the power when you see fit. Equally important, it provides a buffer against time consuming court proceedings and legal costs which would otherwise come when you least need it - when incapacity or disability befalls.
Questions?
There are many other in depth legal considerations involved with the Durable Power of Attorney that cannot practically be included or fully addressed in this article. We at Tyler and Tyler PC would be happy to answer any questions you may have regarding the Durable Power of Attorney and its application to your particular circumstance, or you may contact counsel of your choosing.
Disclaimer: This article is limited to a general overview of the subject matter addressed as based upon relevant law existing at time of writing. The information contained herein is not intended, nor shall be construed, as legal advice to be relied upon by any person, firm or entity; nor is such information intended for application to any particular fact and /or circumstance; nor is such overview intended as a substitute for consultation and advice of counsel.
This article authored by Tyler and Tyler, PC., 400 West Bay Street, PO Box 159, East Tawas, MI 48730. (989) 362-8668. Internet: tylerandtylerpc.com.
