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One alternative to a conservatorship is for the person, while legally able, to execute a "durable power of attorney." A power of attorney is a document signed by the person and notarized, which gives someone the right to legally act for the person. California has enacted legislation which governs the making and handling of durable powers of attorney.
The person who gives a power of attorney is the "principal." The person who is given the power of attorney is the "agent." In naming an agent one can name several people together. If one names two or more persons he or she should indicate whether they must all act together-"jointly," or whether any of the parties may act alone--"severally." One may also name several people, in order, to handle affairs upon incapacity. A wife could be named as the primary agent, and if she is deceased or unable to act, a child may then serve.
A power of attorney is signed by the principal and his or her signature is notarized. The power of attorney does not have to be signed by the agent.
The power of attorney should also indicate that it continues if the principal becomes incapacitated. This makes it a "durable" power of attorney. If such a statement is not in the power of attorney, then it terminates upon the principal's incapacity. A power of attorney, whether durable or not, always terminates when the principal dies.
The power of attorney can be very broad and gives the agent or agents power to sign for the principal, sell assets, make gifts, and other things. It is possible for the courts to review the actions taken by an agent under a power of attorney. This protects the principal to some degree, but it can impose a burden on the agent who may later have to account for all of his or her actions and decisions.
Most powers of attorney are "general" powers of attorney. They are effective immediately, giving the agent very broad authority and continuing unless revoked by the principal or until the principal's death. The power of attorney can be revoked and canceled by the principal at any time.
A few powers of attorney are "limited" powers of attorney. These either continue for a short period of time, such as when the principal is out of the country on a long trip for six to eight months. Or the power of attorney may be for a specific asset
For example, the principal and his brother own the family home after the parent's death. The brother is attempting to sell the home which is in another state. Rather than have all of the legal documents signed by both brothers, one brother may give the other brother a limited power of attorney which allows him to sign all documents with regard to the sale of the home. It does not extend to any other assets.
Some people don't want to give someone a very broad power to handle the their assets. They only want the power of attorney to take effect if they become incapacitated. For these people a "springing" power of attorney may be appropriate. A springing power of attorney only becomes effective upon some certain event, such as when two doctors certify in writing that the principal is incapacitated and unable to manage his or her assets. With the power of attorney and the doctors' written certification, the agent can then act.
The disadvantage of a "springing" power of attorney is that the organization the agent is dealing with, such as the bank or brokerage firm, may decline to accept the document because the organization is unsure if the doctors' certification is acceptable. On occasion, when an agent has presented the springing power of attorney to a brokerage firm, the firm has declined to accept it and told the agent to use a conservatorship proceedings because the brokerage firm thought it would be better.
The organization the agent is dealing with may decline to accept the power of attorney. Many banks and savings associations often have their own form of power of attorney for accounts at the institution. Nearly all insist that their forms be used and will refuse to accept any other power of attorney. The choice is to use their form or get involved in a lengthy and costly lawsuit with the financial organization.
Many title companies will not accept a power of attorney if the power of attorney is too old, or "stale." To them, a power of attorney that is more than six months old may not be acceptable.
While California law relieves any person or organization receiving a power of attorney from any liability in connection with the power of attorney, it still is not always accepted by everyone, despite the fact it is legal and valid.
California law allows the superior court to review the actions taken by any agent under a power of attorney. The court may require the agent to account for his or her actions, may suspend the power of attorney, or take other action. Anyone acting under a power of attorney should be careful to get proper legal advice and to keep detailed records of all actions taken and all moneys received and paid.
California has enacted legislation which creates a uniform statutory form power of attorney. If the law is followed, a simple form is filled in, signed, and notarized. This form can be obtained from an attorney or many stationery stores.
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