FAQ’s: Durable Powers of Attorney

  1. What is a Power of Attorney?
    1. A Power of Attorney is a legal document, which allows you to name another person to act on your behalf for financial matters when you are unwilling or unable to act for yourself.
  2. Why should I have a Power of Attorney?
    1. To have someone handle your financial affairs:
      1. While you are temporarily absent,
      2. While you are incapacitated,
      3. So you, rather than a court, can decide who is best able to handle your finances, and/or
      4. To save time and money.
  3. What are potential costs of not having a Power of Attorney?
    1. Petitioning court to declare you incompetent;
    2. Petitioning court to appoint guardian;
    3. Guardian posting bond;
    4. Guardian filing accountings with court; and
    5. Legal Fees ($2,500 to $20,000).
  4. When is my Power of Attorney Valid?
    1. It is usually valid upon signing.
    2. If you want, it could be valid ONLY when you are incapacitated (i.e. “springing powers”), or in other specified circumstances, you may name (e.g. Limited Power of Attorney).
    3. It can remain valid until death or revocation.
  5. What do I call the person who holds this power?
    1. This person is your Attorney-in-Fact (AIF).
  6. Who should I name as my Attorney-in-fact?
    1. Someone who you trust with your quality of life and financial affairs, and who knows you and understands your wishes.
    2. Someone who is able and knowledgeable.
    3. Someone who is willing and geographically near.
    4. What if the person I name is unwilling or unable to serve?
    1. You can name multiple alternates.
  7. What is Registration? Should I register my Power of Attorney?
    1. Registration (or recording) involves taking the Power of Attorney to the Register of Deeds and having the document become a public record.
    2. Your Power of Attorney does not have to be registered unless you are incapacitated.
    3. If you do register your Power of Attorney, it will be safe and easy to locate. (A certified copy will substitute for the original.)
    4. A Power of Attorney must also be recorded in Register of Deeds in every county in which you own real estate, before it can be used in that county.
  8. Where should I keep my Power of Attorney?
    1. You should have the original, unless you presently intend the AIF to act on your behalf.
    2. Your Attorney-in-Fact should have a copy for reference, and he should have the original if he is presently acting as AIF.
    3. You could register it immediately, if there is a present need or expectation of future incapacity.
    4. Institutions with which you have significant relationships should have a copy, and they should review the copy for compliance with their policies (e.g. Bank, Brokerage, Employer, etc.)
  9. Should my Attorney-in-Fact have the ability to make gifts?
    1. Because your Attorney-in-Fact can have complete control over your finances, allowing him or her the power to give your property away is very dangerous, but this power is often beneficial for financial or estate planning purposes. Without this gifting power, no transfers personal property or real estate for less than full consideration can be made.
    2. If you choose, this power could be limited to the following:
      1. Gifts only to a limited class (e.g. your spouse and/or children);
      2. Gifts only to persons you have given to before (i.e. planned gifting); and/or
      3. $11,000 per year, per recipient (the Gift Tax exemption amount).
  10. Can my Attorney-in-fact make charitable gifts?
    1. Not unless you specifically provide for such on the Power of Attorney, and then only as you specify.
  11. Can more than one person act as my Attorney-in-Fact at the same time?
    1. Yes, you could name two or more persons to act simultaneously.
    2. You could require that the Co-Attorneys-in-Fact act together (jointly), or you could allow them to act individually (severally).
    3. You should seek competent legal advise before appointing more than one AIF to act. Your attorney can help you understand fully the benefits and pitfalls of such a decision.
  12. Can my Attorney-in-fact help support my family (fulfill my support obligations), or is my Attorney-in-Fact limited to helping me?
    1. Other than gifting to your family members, your Attorney-in-Fact could:
      1. Pay for the support or maintenance of your family, and/or
      2. Pay for health care needs of your family.
  13. Will my Attorney-in-Fact get paid?
    1. An individual acting as your Attorney-in-fact could either: (i) not get paid, (ii) could get paid as you designate, or (iii) could petition the clerk of court for compensation from your assets.
    2. A corporate Attorney-in-Fact will be paid.
  14. Does my Attorney-in-fact become liable for my debts? Could I become liable for his debts?
    1. No, and no!
    2. Your debts are separate from your Attorney-in-Fact. Although he or she can often borrow or sign contracts for you, your Attorney-in-Fact cannot become liable for your debts through the Power of Attorney.
    3. Your AIF is acting as your agent. Though your Attorney-in-Fact has control over your assets, his creditors have NO ACCESS to your assets.
  15. How does my Attorney-in-Fact sign documents?
    1. “His or her name,” as Attorney-in-Fact for “Your Name.”