A general durable power of attorney (Gdpoa) is often recommend as a means to avoid guardianship, or "living probate." Although such a document is an important tool in a total estate plan, the Gdpoa alone, or coupled with only a Last Will and Testament, may not furnish the safety the maker seeks.
A Gdpoa is a legal document that allows the "principal" to appoint another person (the "agent" or "attorney-in-fact") to guide the principal's enterprise and financial affairs on the principal's behalf. This document is intended to help in the absence of a essential or while a time when the essential may be physically or mentally unable to guide business. Since the document is "durable," it will continue to be in force and productive even if the essential becomes legally incapacitated. In order to be productive for real estate transactions, the Gdpoa must be recorded in the county clerk's office where the asset is located. A Gdpoa is fine from a condition care power of attorney, and a diminutive power of attorney by its broad scope and application to a wide range of financial matters.
Attorney Washington
A power of attorney that is not durable does nothing to aid in planning for diasability, incompetency, or incapacity, and does little, if anything, to avoid guardianship. A power of attorney that is not durable becomes void when the essential becomes incompetent of incapacitated. Consequently, of the differenct forms of powers of attorney available, it is the Gdpoa that holds the most promise in planning for disability, incompetency, or incapacity.
Practically, though, Gdpoa's can be quite weak and ineffective. Even though powers of attorney are very base and the idea of a Gdpoa has come to be very popular, agents bearing powers of attorney documents have not all the time been treated as if they stand in the principal's shoes. Individuals and institutions routinely reject Gdpoa's upon presentation. Elderlaw Attorney Scot Selis writes at SeniorLawToday.com:
"If you've ever been frustrated by an organization's refusal to honor a Durable Power of Attorney, you're not alone. A power of attorney allows an private to plump another person or habitancy to cope their financial affairs. However, many financial institutions oftentimes refuse to honor a properly signed and witnesses power of attorney."
It is, indeed, frustrating for an agent to find his or her powers refused or disregarded in transactions on a principal's behalf. But, refusal of properly executed a Gdpoa also undermines the intent of the principal, who, in making the Gdpoa, typically assumed he or she was making things easier for his or her family. Although an agent can petition a court of suitable jurisdiction to enforce his or her in effect exercised powers, the prospect of having to litigate transactions that should take place in the ordinary course of enterprise is more than just frustrating. Litigation is high-priced and time-consuming, and never the intent of the essential making the Gdpoa.
The question is so total that groups of attorneys have complained to legislators, Attorney General's offices, and Departments of industry about banks requiring the use of bank's own power of attorney forms and banks refusing to honor powers of attorney generally. While these complaints, over the years, have resulted in more uniform legislation governing the Gdpoa, the practical problems remain.
There are a variety of reasons that an private or practice might reject a Gdpoa. The most base suspect given is that the Gdpoa is "stale," or too old. This suspect is not, however, based upon any legal right, privilege or responsibility of the bank or institution. Most states permit a Gdpoa that has no expiration. Banks commonly reject these documents, purportedly, on the basis of their age.
Another suspect given is that the Gdpoa is not recorded. Recording a Gdpoa is, as mentioned, essential for conducting transactions absorbing real estate, but is commonly not required for other financial transactions. Nonetheless, an private or practice may query that the document be recorded. Recording may not be in the client's best interest, however, particularly if it is unnecessary. Once recorded, the Gdpoa becomes a public record, available to whatever who might request same. A recorded Gdpoa, certified by the county recorder, can be a hazardous instrument in the wrong hands.
Another suspect that is often given for rejecting a Gdpoa is that the Gdpoa does not permit the agent authority to guide the intended transaction. This suspect is based in the law, because an private or practice may be liable if the Gdpoa is suitable to accomplish a transaction not authorized by the Gdpoa. Moreover, if the private or practice is put on consideration that the agent is doing whatever that is not permitted by the Gdpoa, the private or practice facilitating the transaction by accepting the Gdpoa may be liable.
This inherent liability is, of course, a major disincentive for individuals and institutions being asked to accept a Gdpoa. This disincentive is particularly acute when the agent seeks to close an list or liquidate a course or asset using a Gdpoa, because the private or practice cannot know the ultimate disposition of the proceeds. For example, if the Gdpoa does not permit the agent to make gifts to the agent or to third parties, or if the law of the state prohibits such transactions, the practice may fear that closing an list or liquidating an asset may facilitate an improper gift.
Quite apart from the reasons given, the motivations for rejecting a Gdpoa are many, and range from the proper to the ignorant to the improper. proper motivations are many. Institutions may prefer the legal certainty and safety of probate court approval. In such a case, presentation of the Gdpoa may in effect cause or influence to cause an application for guardianship. The practice may, in good faith, suspect improper use of the Gdpoa. The practice may even suspect that the agent is incompetent or otherwise impaired.
Improper motivations causing rejection of a Gdpoa comprise a desire to keep and voice operate of an asset, impeding discovery of improper supervision of assets, undue influence of persons other than the agent, and inequity with an agent's intended use of the assets where the intended use is lawful. There may be, however, no way to distinguish the proper from the improper motivation, because one rejecting the Gdpoa will never admit of improper motivation.
Compounding the difficulties in getting institutions to accept a Gdpoa are the motives of house members seeking to operate a senior's estate. Many Gdpoa's are naturally preempted by a house member filing for guardianship. Diane Armstrong, PhD, testifying before the Senate extra Senate Committee on Aging wrote:
"The majority of these [guardianship] petitions are filed by adult children who are seeking some form of operate over the personal and/or financial affairs of their aging relatives. They are sibling battles rooted in issues of inheritance and control, often described as 'thinly veiled pre-death will contests.' whatever who reaches 62 with coveted assets is at risk. As one forensic psychiatrist noted about these so-called protective proceedings, 'For every 0,000 in a given estate, a lawyer shows up; for every ,000, a house member shows up; and if there isn't any money, then nobody shows up' (quoted in Harold T. Nedd's Fighting over the Care of Aging Parents, Usa Today, July 30, 1998)."
Equally disturbing is the fact that courts often ignore Gdpoa's! The very document upon which most habitancy rely in order to sacrifice the opening of a court-appointed guardian is often naturally ignored by the probate court. Diane Armstrong testified before the extra Senate Commitee on Aging that:
"When an elderly private is brought into court and forced to prove his or her competence, we soon see that the system does not work. We have a system rife with court-sanctioned elder abuse. Why? Judges override protections that have been put in place in the codes. It happens every day. Judges disregard durable powers of attorney - the singular most important document each of us can generate to rule our care should we come to be incapacitated...Judges ignore our lists of preselected surrogate decisionmakers. The current system does not work.
Consequently, Gdpoa's do not furnish complete safety from guardianship. Particularly if a person foresees a need for such safety due to the size or composition of their estate, or due to the composition of their family, or due to a lack of unity in their family, he or she should consult with an estate planning attorney customary with trusts designed to keep and voice operate of assets and decision-making exterior of court involvement or control. Such trust planning, as part of a total estate plan, can afford a more total solution than a Gdpoa and a Last Will and Testament.
Regardless, there are some strategies that can help increase the chances that a Gdpoa will be suitable by an private or institution. First, have the estate plan reviewed annually, and periodically re-execute the Gdpoa. Second, furnish institutions with copies of the Gdpoa in improve of any illness. request a letter from the practice acknowledging receipt of the Gdpoa, and the supervene of its review. With a letter from the practice that the Gdpoa document will be accepted, there is a greater possibility the Gdpoa will be suitable in the future. At a minimum, there is all the time hope that the person who provides the letter is still at the practice when the Gdpoa is used.
Third, execute the institution's ownership Gdpoa. Some banks and brokerage houses require customers to sign their own power of attorney form to allow others to deal with buyer accounts. There is, typically, nothing wrong with these short-form powers of attorney so long as they don't revoke, but naturally enhance, the provisions of the Gdpoa. If there is any query or concern, naturally obatain a copy and have it reviewed by an estate planning attorney. Finally, add the agents' names to all accounts as an "agent" or "attorney-in-fact" before an illness strikes. Titling assets accordingly does not vest ownership ownership in the agents, but increases the chances of the Gdpoa being suitable without reservation when needed.
But, perhaps, the best strategy for planning for incompetency, incapacity and disability is a total estate plan together with a trust.
Powers of Attorney Fail to forestall Guardianship
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