Under California Probate Code sections 4000 – 4545 residents will find specific information about using Powers of Attorney, as well as an explanation of the legal rights of the attorney-in-fact. The attorney-in-fact is the person you name to take over your affairs in the event you become disabled or otherwise unable to make decisions for yourself.
Before you meet with an estate planning attorney and create a power of attorney, it is important to understand Durable Power of Attorney pros and cons.
Advantages of Powers of Attorney
The Superior Court of California defines powers of attorney as "A Power of Attorney is a document that lets you appoint someone to represent you." These are very important documents since the person you appoint will be acting as if you were acting yourself. There is a lot to like about these documents including:
- Cost to Establish – There is very little cost in establishing a power of attorney. Your estate planning lawyer can help you prepare the document and ensure it is properly executed.
- Decision Making – You are able to determine who should make decisions on your behalf and you can control which decisions they may make on your behalf. For example, you can specify that your attorney-in-fact may pay your bills but may not purchase items over a specific value on your behalf.
- Financial Backing – Should you determine that it is necessary, you may request your attorney-in-fact either be bonded or provide an accounting of all actions they take on your behalf to a specific person.
Disadvantages of Powers of Attorney
As with any legal authority that is granted to another person, there are potential pitfalls. Some of the more common ones associated with powers of attorney include:
- Competence – Family members who are upset because you did not grant them specific authorities could claim you were incompetent at the time of appointing an attorney-in-fact.
- Dealing with Finances – Every financial institution has different rules and regulations and some may require you use a specific form. This is important to discuss with your estate planning attorney so we can take specific steps to deal with this before it becomes an issue. Keep in mind, some financial institutions may require special certifications if the document is more than six months to one year old. Your estate planning attorney can typically assist with this certification.
- Abuse of Power – Unfortunately, powers of attorney can be abused and an attorney-in-fact can steal monies or carry out acts that the principal never intended. It is crucial that you work with your estate planning lawyer to ensure there is a system of checks and balances and that a power of attorney is very specific in explaining specifically the ability your attorney-in-fact has over your finances.
Powers of attorney can be a powerful estate planning tool and when you are making the decision to appoint someone as your attorney-in-fact, contact the Law Offices of James C. Shields for help. We can help you create a power of attorney that helps you maximize the advantages and minimize the disadvantages of powers of attorney.