When planning your estate, you’ve probably heard of a document called a Power of Attorney. Most lawyers include this in estate planning to ensure that your family doesn’t have to go through expensive guardianship proceedings to access your funds and property in case you become too incapacitated to act on your own. If you’d like to plan your estate and you’re searching for a power of attorney lawyer near me located in Manhattan, Queens, Brooklyn, Bronx, or Staten Island, we at the Law Offices of Albert Goodwin are here for you. You can call us at 718-509-9774 or send us an email at email@example.com.
The importance of having a Power of Attorney
A Power of Attorney Lawyer near you will explain to you that a Power of Attorney is an important legal document that allows you, the Principal, to appoint another person, called the Agent, to perform acts on your behalf, such as banking transactions, real estate transactions, and insurance transactions. In order to be effective, both the Principal and the Agent must sign it (though not necessarily at the same time), and each must acknowledge it before a notary. If the Agent is also authorized to make gifts, two witnesses are required.
Because the Agent can perform acts on your behalf, it is a very powerful document that can be subject to abuse. It could happen that an Agent appears to act on your behalf, such as disposing of your property, without your consent or knowledge. When you become incapacitated, the Agent may be acting, not in your best interests, but in his best interests. For example, an Agent, if authorized to make real estate transactions on your behalf, can sell your house. An Agent who can perform banking transactions can withdraw all the money in your bank account. This is why, most Agents appointed by the Principal are close family members, such as the parents, spouse, or children.
Even if you appoint close family members as your Agent, this does not guarantee that the Power of Attorney you executed in their favor will be free from abuse. The only way to prevent abuse is to ensure that your Power of Attorney provides specific safeguard mechanisms in the modifications portion of the statutory form to ensure your protection.
The Types of Power of Attorney
There are four types of Powers of Attorney: the Durable Power of Attorney, the Non-Durable Power of Attorney, the Limited Power of Attorney, and the Springing Power of Attorney.
A Power of Attorney lawyer near you will explain that the differences in the four types of Powers of Attorney are based on timing, effectivity, and duration. For example, a Non-Durable Power of Attorney is effective upon signing and becomes ineffective when the Principal becomes incapacitated. A Durable Power of Attorney, on the other hand, is effective upon signing and remains effective despite the Principal’s incapacity. The Springing Power of Attorney, although signed immediately, is only effective when the Principal becomes incapacitated. Lastly, the Limited Power of Attorney is effective only for a particular period or restricted to a particular matter or set of actions that an Agent can do.
Generally, when planning for incapacity, a power of attorney lawyer near you will draft a Durable Power of Attorney or a Springing Power of Attorney, depending on your preference. If you’d like to maintain control over your property, to the exclusion of everyone else, while you are still capacitated, then a Springing Power of Attorney is more appropriate. However, if you would like to share your powers with your Agent even while you are still capacitated, a Durable Power of Attorney will be a better fit for you. One disadvantage of a Springing Power of Attorney is its need for a doctor’s certification, medically certifying your incapacity, in order for the Agent to act on your behalf, making the procedure slower and more laborious.
Examples of using a Powers of Attorney
For example, you execute a non-durable power of attorney, authorizing your wife, A, to enter into banking transactions on your behalf. This non-durable power of attorney was given to your bank for recording and reference. You subsequently got into a hit-and-run accident, which resulted in your being in a coma. While you were still unconscious and still in a coma, your spouse, A, went to your bank to withdraw money to pay for your hospital bills. Can you do this with a non-durable power of attorney? No, because a non-durable power of attorney ceases to become effective when the principal loses capacity. Since you are unconscious and in a coma, you have lost capacity to make decisions. Thus, the non-durable power of attorney you executed in favor of your spouse, A, has become ineffective.
Supposing that you executed a durable power of attorney, can A withdraw from your bank to pay for your medical bills, even if you are still in a coma? Yes, because a durable power of attorney stays effective despite the principal’s incapacity. Even if you are in a coma and have lost capacity, your spouse and agent, A, is still authorized to perform the acts and powers granted in the durable power of attorney.
Another example would be, you executing a durable power of attorney, authorizing your wife, A, to enter into real estate transactions on your behalf. You have a house in Brooklyn deeded in your name only. You still have capacity to make decisions and do not appear to be mentally incapacitated in any way. A, as your agent, sold the house to a third party. Is the sale valid? Generally, the sale is valid because A appears to have acted within her authority in selling your house. A has a durable power of attorney to enter into real estate transactions on your behalf, which authority is effective immediately upon signing even if you still have capacity.
Suppose, however, that you executed a springing power of attorney and not a durable power of attorney, is A’s act of selling your house to a third party valid, considering that you still have capacity? No, A’s act of selling your house to a third party is void. Because you only signed a springing power of attorney, A does not have the power to represent you in a real estate transaction until your physician issues a certification that you have lost mental capacity.
Safeguard Mechanisms in a Power of Attorney
The above examples show how a Power of Attorney can be abused. Thus, a Power of Attorney lawyer near you will be able to modify the statutory form to ensure that your rights as Principal will be protected.
In the example above where you authorized your spouse, A, to enter into banking transactions in a Durable Power of Attorney, a Power of Attorney lawyer near you can modify the document to limit banking transactions to a certain amount, for example, $1000. You can write that transactions above $1000 require your approval, or the approval of another person, in case you are incapacitated.
In the example where you authorized your spouse, A, as your agent to enter into real estate transactions, a Power of Attorney lawyer near you can also limit and modify this power by allowing your Agent, A, to enter into real estate transactions, but require that all proceeds of the real estate transactions executed in your behalf be deposited to your bank account.
In the statutory form, there is a portion that can be checked, allowing the agent to make gifts up to $5000 annually. This can still be modified in the modifications portion by disallowing the agent to make gifts to himself or to his family or allowing the agent to make gifts for purposes only of Medicaid planning.
Given above, it is very important to only appoint an agent in a power of attorney that you completely and absolutely trust. Still, there are several ways to limit the grant of powers in a power of attorney that will provide safeguard mechanisms for you. For this reason, it is always important to consult with a Power of Attorney lawyer near you before signing any power of attorney.
If you feel that a Power of Attorney has been abused, or you need a Power of Attorney drafted, together with some estate planning, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY, and Queens, NY. If you’d like to plan your estate and you’re searching for a power of attorney lawyer near me, you can call us at 718-509-9774 or send us an email at firstname.lastname@example.org.