Print Form For Power Of Attorney Over Property And Finances Powers of Attorney Fail to Prevent Guardianship

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Powers of Attorney Fail to Prevent Guardianship

A general durable power of attorney (GDPOA) is often suggested to avoid guardianship, or as a “living probate”. Although such a document is an important tool in a comprehensive estate plan, the GDPOA alone, or only in conjunction with a last will and testament, cannot provide the protection sought by the creator.

A GDPOA is a legal document that allows a “principal” to appoint another person (“agent” or “attorney-in-fact”) to conduct the principal’s business and financial affairs on the principal’s behalf. This document is intended to assist in the principal’s absence or when the principal is physically or mentally unable to conduct the business. Because the document is “durable,” it will remain in force and effect even if the principal is legally incapacitated. To be effective for a real estate transaction, the GDPOA must be recorded in the county clerk’s office where the property is located. The GDPOA is distinguished from a health care power of attorney, and a limited power of attorney by its broader scope and application to a wider range of financial matters.

A non-durable power of attorney does nothing to help plan for disability, incapacity or incapacity, and does little, if anything, to avoid guardianship. A non-durable power of attorney is void when the principal becomes incompetent. Consequently, of the various forms of power of attorney available, it is the GDPOA that holds the most promise for planning for incapacity, incapacity, or incapacity.

In practice, however, GDPOA can be quite weak and ineffective. Although the right of attorney is very common and the concept of the GDPOA has become very popular, agents who carry rights to impeached documents have not always been treated as standing in the principal’s shoes. Individuals and organizations routinely reject the GDPOA in presentations. Elderlaw attorney Scott Celis writes at SeniorLawToday.com:

“If you’ve been frustrated that an institution has refused to honor a durable power of attorney, you’re not alone. A power of attorney allows a person to select another person or persons to handle their financial affairs. However, many financial institutions. Frequently sign correctly done and refuse to honor the witness’s power of attorney.”

Indeed, it is disappointing to find that the agent has denied or ignored his power to transact on behalf of the principal. However, refusing to properly implement the GDPOA also undermines the intent of the principal, who, in creating the GDPOA, generally assumed that he or she was making things easier for his or her family. Although an agent may petition a court of appropriate jurisdiction to enforce his or her lawfully exercised powers, the prospect of litigation involving transactions in the ordinary course of business is not only hopeless. Litigation is expensive and time consuming, and is never the principal’s intention to create a GDPOA.

The problem is so widespread that lawyers’ groups have complained to legislatures, attorney general’s offices, and commerce departments about requiring banks to use their own power of attorney forms and banks generally refusing to honor attorneys’ rights. Although these complaints have, over the years, resulted in more uniform legislation governing the GDPOA, practical problems remain.

There are a variety of reasons that an individual or organization may decline the GDPOA. The most common reason given is that the GDPOA is “stale,” or too old. However, this reason is not based on any legal right, privilege or liability of the Bank or the Institution. Many states allow GDPOAs that do not expire. Banks usually reject these documents, allegedly, on the basis of their age.

Another reason given is that GDPOA is not recorded. GDPOA recording, as noted, is required to conduct transactions involving real estate, but is generally not required for other financial transactions. However, an individual or organization may request that a document be recorded. Recording may not be in the client’s best interest, however, especially if it is unnecessary. Once recorded, the GDPOA becomes a public record, available to anyone who may request it. A recorded GDPOA, certified by the county recorder, can be a dangerous tool in the wrong hands.

Another reason for rejecting the GDPOA is that the GDPOA does not allow agent authority to conduct the intended transaction. This reason is based on the law, because the GDPOA can hold a person or entity liable if they agree to conduct a transaction not authorized by the GDPOA. Furthermore, if the person or entity is notified that the agent is doing anything not permitted by the GDPOA, the person or entity that facilitated the transaction by accepting the GDPOA may be held liable.

This potential liability is, of course, a major incentive for individuals and organizations asked to accept the GDPOA. This disincentive is particularly acute when an agent seeks to close an account or liquidate a policy or asset using the GDPOA, because the individual or entity cannot know the ultimate disposition of the proceeds. For example, if the GDPOA does not permit an agent to make gifts to agents or third parties, or if state law prohibits such transactions, the organization may fear that closing accounts or liquidating assets may facilitate improper gifts. .

Apart from the reasons given, the motivations for rejecting the GDPOA are many, and range from reasonable to ignorant to unjustified. Reasonable motivations are many. Institutions may prefer the protection of legal certainty and probate court approval. In such a case, the presentation of the GDPOA may actually give rise to or effect an application for guardianship. An organization may, in good faith, suspect improper use of the GDPOA. The organization may suspect that the agent is incapacitated or otherwise impaired.

Improper motivations for rejecting the GDPOA include the desire to retain and maintain control of the property, obstruction of detection of improper management of the property, undue influence of persons other than the agent, and disagreement with the agent’s intended use of the property. is valid. However, there may be no way to distinguish proper from improper motivation, because someone who rejects the GDPOA would never accept improper motivation.

Adding to the difficulties for organizations to accept the GDPOA is the intent of family members seeking to control the senior’s assets. Many GDPOAs are preempted by a family member filing for guardianship. Diane Armstrong, Ph.D., in testimony to the Special Senate Committee on Age of the Senate, wrote:

“Most of these [guardianship] Petitions are filed by adult children who are seeking some form of control over the personal and/or financial affairs of their elderly relatives. They are sibling battles rooted in issues of inheritance and control, often described as ‘thinly veiled pre-death rivalries’. Anyone who reaches 62 with significant assets is at risk. As one forensic psychiatrist noted of these so-called protective proceedings, ‘For every $100,000 in a given estate, a lawyer appears; For every $25,000, one family member appears; And if there’s no money, nobody shows up’ (quoted in Harold T. Neds. Fighting to care for aging parents, USA TodayJuly 30, 1998).

This is equally terrifying Courts Often ignore the GDPOA! Documents that most people rely on to reduce the likelihood of a court-appointed guardian are often ignored by the probate court. Diane Armstrong testified before the Special Senate Committee on Aging that:

“When an elderly person is brought to court and forced to prove their competency, we quickly see that the system doesn’t work. We have a system running with court-sanctioned elder abuse. Why? Judges override the protections that are in place. Put in the codes. It happens every day. Judges ignore enduring powers of attorney – The single most important document each of us can create to determine our care should we become incapacitated…Judges ignore lists of preselected surrogate decision makers. The current system does not work.

Consequently, the GDPOA does not provide absolute protection from guardianship. Especially if a person believes they need such protection because of the size or structure of their assets, or because of the composition of their family, or because of the lack of unity in their family, they should consult an estate planning attorney. Familiarity with trusts designed to hold and maintain assets and decision-making control outside of court involvement or control. Such a trust plan, as part of a comprehensive estate plan, may afford a more comprehensive solution than the GDPOA and a last will and testament.

Regardless, there are some strategies that can help increase the likelihood of GDPOA being accepted by an individual or organization. First, review the estate plan annually, and re-execute the GDPOA periodically. Second, provide organizations with copies of the GDPOA before any illness occurs. Request a letter from the organization acknowledging receipt of the GDPOA and the results of its review. With a letter from the organization stating that the GDPOA document will be accepted, there is a high chance that the GDPOA will be accepted in the future. At the very least, there is always hope that the person providing the letter is still at the institution when GDPOA is used.

Third, implement an organization-owned GDPOA. Some banks and brokerage houses require clients to sign their Power of Attorney form to allow others to handle client accounts. There is nothing wrong with these short-form powers of attorney unless the provisions of the GDPOA are repealed, but not simply enhanced. If there are any questions or concerns, just get a copy and have it reviewed by an estate planning attorney. Finally, add the agent’s name to all accounts as “Agent” or “Attorney-in-Fact” before the illness occurs. Titling the properties accordingly does not vest ownership rights in the agents, but increases the likelihood that the GDPOA will be accepted without reservation if needed.

But, perhaps, the best strategy for planning for incapacity, incapacity, and incapacity is a comprehensive estate plan with a trust.

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