While no one likes to consider the possibility of becoming incapacitated and unable to make their own decisions, preparing for an uncertain future is crucial for protecting your rights, your assets, and your family. Sustaining a serious injury or illness, developing a neurogenerative disease, or simply experiencing the inevitable effects of aging can all impact someone’s ability to reason and manage important affairs. At some point, most of us will need someone else to step in and help make critical decisions about finances, property, healthcare, insurance, and more.
Even if you already have a last will and testament in place, this document only covers how your estate should be managed after your death and does not address crucial end-of-life planning. Relying solely on a will does not provide adequate protection for you if you become mentally or physically incapacitated and unable to express your will in a legally binding manner. To truly prepare for the future, you need a comprehensive and legally enforceable estate plan that includes powers of attorney.
If you are interested in getting your affairs in order before you are confronted with an unexpected life change, consult the following guide to learn more about powers of attorney and how to put them to work securing your future, then contact Bochnewich Law Offices today. Our Indio powers of attorney lawyers can help you explore your options for end-of-life planning, getting your estate in order, and pursuing the right solution for your unique circumstances.
What Are the Four Powers of Attorney?
In California, there are four primary types of powers of attorney: general, limited, durable financial, and durable healthcare.
General Power of Attorney
A general power of attorney grants an agent broad authority to act on your behalf in all legal matters, excluding decisions about healthcare. The agent can handle your financial affairs, manage your assets, sell property, make investments, or take other actions in your best interest. This is often used by clients who would like assistance with their financial or business responsibilities or those who experience physical impairments that limit their ability to perform these tasks independently. However, this authority only applies while you remain mentally competent and automatically ends if you become incapacitated. If you want the agent’s authority to continue in the event of your incapacitation, you need to include language in the document that clearly states it is a durable power of attorney.
Limited Power of Attorney
A limited power of attorney is more limited in scope and authorizes an agent to act in specific areas of your life or in predetermined scenarios. It stipulates which decisions they are responsible for, defines their role in the process, and outlines the obligations they are expected to fulfill. It can be created to apply to a single transaction, such as registering a vehicle on your behalf, or can be written so that it’s only valid for a certain predefined period of time, which you might use if you were planning to travel out of the country, for example. A common example of a limit placed on an agent’s powers under a limited power of attorney arrangement would be for the agent to have access to their client’s financial accounts, but under the condition that they are only to use this access for depositing funds, not writing checks or making withdrawals.A limited power of attorney is particularly useful if you have sizable assets of different types or across multiple locations. For example, rather than granting your agent the power to handle all real estate transactions, you can limit their decision-making authority to buying or selling a specific property. Similar to a general power of attorney, a limited power of attorney is only valid while you are mentally competent, but by including specific language it can be made durable so that it remains in effect if you are incapacitated.
Durable Financial Power of Attorney
In contrast with the non-durable powers of attorney listed above, a durable power of attorney remains legally valid after you become mentally incompetent or physically incapacitated. This allows the agent to continue handling their client’s affairs and making decisions on their behalf after a debilitating injury or loss of faculties. A non-durable power of attorney can be made durable by including a statement such as “This power of attorney shall not be affected by the subsequent incapacity of the principal.” All powers of attorney are considered non-durable without specific language stating otherwise.There are durable powers of attorney for finances and durable powers of attorney for healthcare decisions. A durable financial power of attorney can allow an agent to manage specific transactions or grant full authority to the agent to handle all financial affairs. Depending on the exact wording of the document, this document may be effective immediately upon signing or only take effect in response to a future event, such as being declared incompetent or otherwise unable to make sound decisions.With a financial durable power of attorney in place, the agent you select can immediately step in and begin making decisions on your behalf if you become incapacitated. Although professional education or training in financial matters is not required for this position, it is crucial that you select someone you trust to manage your finances in a way that aligns with your goals, values, and personal philosophy.
This type of power gives an agent the right to perform duties such as:
Accessing financial records, bank statements, and mail
Negotiating and signing contracts
Purchasing, selling, or otherwise transferring real property
Paying for daily expenses and other bills
Buying and selling stocks, bonds, or other securities
Changing beneficiary designations
Purchasing insurance policies
Managing retirement accounts
Collecting government benefits
Filing and paying income taxes
Operating a business
Hiring and terminating employees
It is important to note that even a durable financial power of attorney only applies while you are alive. Upon your death, your financial affairs will be managed by the executor of your estate that you designate in your will. You can choose the same person as an agent and executor, but you must file separate documents with the court to do this.
Durable Power of Attorney for Healthcare
Also referred to as a medical power of attorney, a durable power of attorney for healthcare grants an agent (or healthcare proxy) the power to make medical and healthcare decisions on your behalf if become incapacitated and are unable to communicate your wishes due to a medical condition or emergency. This agent has access to your medical records and works with your physicians and other healthcare providers to ensure you receive the proper medical care. They are legally obligated to make decisions according to your preferences and only approve medical treatments you would have wanted.Some principals also choose to draft a healthcare directive as part of their end-of-life planning. This document outlines your specific instructions for care to your healthcare proxy to eliminate any uncertainty or confusion about your intentions. For example, you can instruct your agent not to use extraordinary life-extending measures if your doctor diagnoses you with a terminal condition or you are in a coma. In California, you can combine your durable power of attorney for health care and your healthcare directive into a single document called an advanced health care directive that allows your agent to make all decisions about healthcare, medical treatment, and end-of-life preparations.It is possible to establish a durable financial power of attorney and a durable power of attorney for healthcare in one legal document and select the same person to serve as an agent in both capacities. However, carefully consider whether this is in your best interest before making this decision. You may trust someone to pay your bills but not feel comfortable giving them access to your medical information or ultimate control over life and death decisions. Make sure your healthcare proxy is someone who either shares your values or will be committed to respecting and honoring them.
What Are the Requirements for a Power of Attorney?
You must be at least 18 years old, of sound mind, and have the legal capacity that is required to enter into a contract. In other words, you must be able to manage financial affairs and resist fraud, coercion, or undue influence by other parties.
You must select an agent who is at least 18 years old and mentally competent.
You must list your full legal name and address and the full legal name and address of your proposed agent.
You must have a notary confirm your identity and the agent’s identity before you can sign the power of attorney document.
You must list the specific and separate types of authority you are granting to the agent. You can name multiple agents in this document, but you must stipulate which specific types of decisions each agent can make on your behalf.
At least two adult witnesses must physically witness you signing the document or witness you acknowledging the validity of your signature on the document, along with their full legal names and addresses. You cannot pay witnesses for performing this duty. The following individuals are prohibited from serving as witnesses:
Relatives by blood, marriage, or adoption
Beneficiaries of your estate
The attorney who drafted the document
The proposed agent
If you are of sound mind but physically unable to sign the document due to stroke, paralysis, or another medical condition, you must select someone to sign it for you in your presence and at your discretion.
If you are establishing a durable power of attorney for healthcare, neither your agent nor your witnesses can be in any way associated with your healthcare providers or their employees.
If you are establishing a durable power of attorney, you must include the date of execution and explicitly state that this document should remain in effect if you become incapacitated.
Your power of attorney must be notarized.
Your agent must keep detailed records of every action taken and transaction made under the power of attorney and share them with any family member or other interested party that asks to review this accounting.
A power of attorney is effective immediately after it is signed, witnessed, and notarized, and will remain legally valid for the remainder of your life (durable) unless it includes a specific duration or expiration date. Powers of attorney automatically end upon your death, but you can revoke this document at any time if you are mentally competent.
Do I Need a Power of Attorney If I Have a Living Trust?
A living trust is a valuable estate planning document for protecting your assets and controlling how they are managed and distributed after your death. This document can help you avoid estate taxes, prevent will contests, and allow your loved ones to access their inheritances without forcing them to undergo the complicated and time-consuming probate process. However, a living trust only applies to the assets and property that have been titled to the trust, therefore the trustee has no authority over any assets or property outside of the trust. Living trusts also do not encompass personal care or healthcare decisions, and trustees cannot legally handle these issues without being designated as an agent under a power of attorney.
How Do I Respond If My Power of Attorney Is Contested?
When your agent attempts to make decisions on your behalf involving a bank, investment firm, hospital, healthcare provider, or other institution, they may find that their power of attorney is contested. Many institutions have certain protocols for processing and approving power of attorney designations and may require you to fill out their own forms before they allow your agent to make decisions on your behalf. However, some situations can be much more complicated. An Indio powers of attorney lawyer can help you and your agent navigate the process of proving power of attorney and resolve any potential issues that may arise.
Can a Power of Attorney Be Revoked?
After naming an agent in a power of attorney, you still retain the right to handle your personal, financial, and healthcare affairs and to make your own decisions, meaning you can override any decisions an agent makes on your behalf. You can also revoke any or all the authority you granted to your agent in the power of attorney document. Revoking power of attorney legally terminates the principal-agent relationship and the agent’s ability to make decisions on your behalf. You can revoke general or durable powers of attorney at any time for any reason as long as you created the original document and are still mentally competent to make decisions about your affairs. You do not need consent from the agent to do so, you are not required to attend a court hearing, and there is no waiting period before the revocation becomes effective.
Unless your power of attorney document contains specific revocation conditions, you only need to draft a written document that states you are revoking the power of attorney (a Notice of Revocation), sign this document in front of a notary, and give copies of the signed document to the court clerk and the former agent. You should also distribute copies to any individuals, agencies, or institution that had your previous power of attorney document on file. If you did not share the original power of attorney document with anyone or informed the agent about its existence, simply destroy all copies. If you want to transfer power of attorney to a different agent, prepare a new document stating your intention to revoke all prior powers of attorney, and this will both invalidate and supersede the original document.
You should consider revoking power of attorney in these situations:
The power of attorney is no longer needed. For example, if you were experiencing a serious illness or injury that required hospitalization and established a power of attorney in case your condition worsened, but have since made a full recovery, you no longer need someone to serve in this role. A power of attorney can also be created to fulfill one single task, such as selling a piece of real estate, then revoked afterward.
The agent has changed their mind about serving in this role and is no longer interested.
The agent is no longer fit to make decisions on your behalf or perform their duties. This can happen if their health deteriorates, they prove negligent in fulfilling their obligations, or you no longer trust them to manage your affairs.
You relocated to a different state. Each state has their own laws and requirements regarding powers of attorney, so revoking a prior power of attorney and creating a new one in line with the laws of the state you move to can avoid any potential misinterpretations.
If your agent abuses you in any way or fails to uphold their fiduciary duty but you are unable to revoke their authority due to incapacitation, your family members or other interested parties can challenge the power of attorney document by filing a petition with the probate court. An Indio powers of attorney lawyer can help them determine whether revoking the agent’s power is the right solution. If your lawyer feels there are reasonable grounds to challenge the power of attorney in court, they can help your relatives prepare the petition, gather evidence that the agent has acted unlawfully, represent you in court, and persuade the judge that invalidating the document is in your best interests. If the court approves this decision, your attorney can also help you select an alternative agent as a replacement.
What Is Abuse of Power of Attorney?
Selecting a responsible, reliable individual to serve as your agent is critical for protecting yourself and your estate. Still, granting power of attorney to the wrong person can and does happen. Unfortunately, seniors are common targets for financial predators who aim to defraud or exploit them, and these predators can even be friends or family members. You may choose someone you think you can trust only to later discover they have been negligent in their role or are taking advantage of you. When an agent fails to uphold their fiduciary duty, places undue influence on you for their benefit, commits financial fraud, takes any adverse actions that are not in your best interest, or otherwise misuses the power they have been granted, this is considered abuse of power of attorney.
Examples of this type of abuse include:
Coercing you to sign a power of attorney document against your will or by threat
Creating a fake power of attorney document and forging your signature
Altering the terms of your will without your knowledge or consent
Transferring their power of attorney authority to another person
Stealing funds from your financial accounts
Using your bank cards to make fraudulent purchases
Appropriating your assets, such as real estate, and insurance settlements
Draining retirement accounts and pension
Stealing your identity to open lines of credit or apply for benefits
Purchasing securities or annuities in your name
Selling your personal information to others
Attempting to make decisions about the administration of your estate after your death
Although abuse of power of attorney is typically financial in nature, it can also take the form of physical abuse, as well, for medical powers of attorney. A malicious or self-serving agent may commit you to a nursing facility against your will, refuse to give you appropriate care or meet your needs, or authorize unnecessary medical treatments and procedures.
What Should I Do If I Suspect Abuse of Power of Attorney?
If you believe your loved one is being victimized by their agent, you can respond with legal action. Still, removing an agent and replacing them can take weeks, so moving quickly is vital to for preserving their rights, terminating the agent’s authority, and mitigating the consequences of the abuse. An Indio powers of attorney lawyer can help you file civil claims for breach of fiduciary duty, conversion (stealing assets), and/or fraud, represent you in court, and recover restitution for your damages. Damages include lost income, medical bills, property damage, pain and suffering, loss of enjoyment of life, loss of consortium, attorney’s fees, and punitive damages (if the agent engaged in malicious, oppressive, or fraudulent behavior).
These matters are usually handled in civil court, but in some cases, you may also be able to pursue criminal charges against the agent for theft, fraud, embezzlement, forgery, or identity theft. When the agent willfully causes or permits these crimes to be committed against a senior, and the victim sustains an injury or mental suffering, or is put into a position where their health is endangered, the agent may be charged with elder abuse under California Penal Code Section 368. Penalties vary depending on the circumstances and severity of the crime and the age of the victim, but a conviction is punishable by up to $10,000 in fines and seven years in state prison.
Why Do I Need a Power of Attorney?
The main advantage of establishing a power of attorney is that it enables you to designate an agent to act on your behalf and clearly outline your needs and wishes with them while you are still capable of doing so. You can draft these arrangements to reflect both your current needs and future plans for management of your estate and important personal care decisions. This ensures your assets are properly managed if you are unable to handle these affairs on your own and gives you the opportunity to retain control over your healthcare and medical treatment if you are later declared legally incompetent. It also eliminates any potential misunderstanding or confusion about how you want your affairs to be handled, ensuring your family members know what to expect and preventing distressing family conflicts.
If you fail to create powers of attorney and unexpectedly become incapacitated, your loved ones will be forced to file a petition for conservatorship to appoint someone to guide your medical decisions and/or conservatorship of the estate for legal and financial decisions to be made. This process can be expensive, time-consuming, and cause unnecessary stress on your loved ones during an already difficult time. Empowering a family member or other trusted individual to make these decisions for you and act in your best interest allows you to have the final say in important life matters, avoid conservatorship proceedings, reduce the burden on your loved ones, and save significant amounts of time, money, and drama.
Should I Name Multiple Agents in a Power of Attorney?
You can name multiple agents in a power of attorney and stipulate whether these agents should serve concurrently or jointly. Concurrent agents each have the full authority granted to them in the powers of attorney document and can make independent decisions, while joint agents must work together and agree before taking any actions. Naming multiple agents in your power attorney document can be helpful, as splitting the decision-making responsibilities can make this role less stressful for agents, encourage more efficient problem-solving, and provide additional protection against potentially poor or impulsive decision making by a single agent. If you own different types of assets (for example, real estate and a vintage car collection), it can be best to name one agent to manage each type of asset based on their different skillsets.
However, even with proper planning, naming multiple agents in a power of attorney can also create unnecessary obstacles. Because every decision must be approved by both co-agents, it can create logistical problems and take longer to manage time-sensitive tasks. Co-agents may not always agree on how to handle your affairs and the resulting disputes could even require litigation to resolve. Furthermore, certain institutions do not accept the authority of co-agents. If two people enter a bank claiming the same authority but carrying different instructions, this can trigger fraud concerns, delaying or completely halting important financial or business matters.
Ultimately, deciding whether to name multiple agents to a power of attorney depends on your specific circumstances and needs. If you decide to take this approach, you must carefully draft your power of attorney document so that it clearly defines the scope and limits of each agent’s responsibilities. Before creating this document, speak with the co-agents to ensure they fully understand their roles and obligations, agree with the terms it contains, and can productively communicate among themselves to accomplish your goals. Consider adding dispute resolution provisions to the document, as well, so that if your agents are unable or unwilling to reach agreements with one another, issues can still be resolved without your estate ending up in court.
Do I Need a Lawyer to Create a Power of Attorney?
Although it is not legally required to retain the services of an Indio powers of attorney lawyer to enact a power of attorney, legal representation is strongly recommended for the maximum level of protection. Ultimately, the power of attorney is only as strong as the language used to draft it. You must carefully and precisely craft this document according to not just your will, your goals, and your financial situation, but also state laws. Furthermore, you must designate the best person to serve in the position of agent, and clearly outline the specific conditions under which your agent has the authority to act on your behalf, and to exactly what extent.
You may be able to complete a standard power of attorney document on your own, but if you fail to use specific enough language, do not have witnesses to verify your signing of the document, do not notarize it, or make any number of other routine technical errors, a judge can contest the validity of the document. A lawyer who specializes in these matters can help you create a comprehensive, legally binding document that is specific to your unique situation and will remain a valuable and durable asset for as long as you need it.
Because powers of attorney are not subject to oversight by outside parties, it is unfortunately far too easy for someone to abuse their authority for financial gain if your document includes loopholes by failing to be precise enough to prohibit certain actions, or if you fail to monitor your agent’s actions closely. You may not even realize you are being taken advantage of until it’s too late and your accounts have already been drained.
Prepare for Your Future with Powers of Attorney
Contact Bochnewich Law Offices to learn more about how we can help you prepare for the future with powers of attorney. Our team has decades of experience in estate planning and administration, probate, and elder law, and we have represented thousands of clients in Southern California. Do not leave your personal, financial, or medical decisions to chance – get in touch with us today to protect yourself, your loved ones, and your estate.
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