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Power of Attorney in California: Guide and Requirements

One of the most important plans anyone can make is an estate plan. Contrary to common belief, estate plans are about more than what happens after a person dies. In the event that a person becomes incapacitated, a well-crafted estate plan can ensure that their affairs continue to be taken care of and that their medical wishes are respected. One of the most common legal mechanisms to accomplish that is through the use of power of attorney. However, granting power of attorney also comes with the risk of fraud and abuse. The best way to craft an effective power of attorney and minimize the potential for abuse is to consult a California power of attorney abuse lawyer.

Why Have a Power of Attorney? 

Power of attorney arrangements are among the most powerful and versatile estate planning tools available. Generally, they allow you to appoint someone you trust to handle your affairs and give them legally binding instructions on how to do so. Depending upon the type of power of attorney granted, this person can continue to manage your affairs in the event that you become incapacitated. If you become incapacitated without a power of attorney in place, your loved ones may have to seek a conservatorship — a complex, costly, multi-step legal proceeding that offers significantly less flexibility than power of attorney.  

Elements of a Valid Power of Attorney  

There are two parties to a power of attorney: the principal (i.e., the person who is granting the power) and the attorney-in-fact (i.e., the person who receives the authority to act on the principal’s behalf). 

Creating a power of attorney is fairly simple and proceeds much like the creation of other estate planning documents, such as wills and trusts. Many state bar associations even provide standard forms to use when creating a power of attorney. However, for a customized power of attorney, you should consider speaking to a California power of attorney abuse lawyer

A power of attorney is legally sufficient if: 

  1. The power of attorney contains the date of its execution 
  2. The power of attorney is signed either (a) by the principal or (b) in the principal’s name by another adult in the principal’s presence and at the principal’s direction. 
  3. The power of attorney is either (a) acknowledged before a notary public or (b) signed by at least two witnesses. 

Importantly, only a natural person having the capacity to contract may execute a power of attorney. In other words, once the person seeking to grant power of attorney has become incapacitated, it is too late. 

Types of Power of Attorney 

California law allows a principal to grant an attorney-in-fact the power to act on the principal’s behalf with respect to “all lawful subjects and purposes.” This includes the power to act with regard to the principal’s property (i.e., finances) and personal care (e.g., determining where the principal will live, providing meals, hiring household employees, providing transportation, handling mail, and arranging recreation and entertainment). However, the two most common types of power of attorney in California are financial power of attorney and medical power of attorney. 

General Power of Attorney 

General power of attorney allows the attorney-in-fact to act on behalf of the principal to manage the principal’s legal and financial affairs. While no power of attorney can give an attorney-in-fact the authority to do everything the principal could on their own, general power of attorney comes close. This includes: 

  • Paying bills and managing investments
  • Buying and selling real and personal property 
  • Signing contracts
  • Filing taxes 
  • Hiring caregivers 
  • Managing retirement benefits 
  • Creating, modifying, revoking, or terminating a trust (only if expressly authorized)

With a general power of attorney, the attorney-in-fact’s decisions and actions are given the same legal effect as if they were the principal’s own. Given the breadth of powers typically granted to attorneys-in-fact under general powers of attorney, you should consider speaking to a California power of attorney abuse lawyer if you are considering one.  

Special or Limited Power of Attorney 

A special or limited power of attorney allows the attorney-in-fact to act on behalf of the principal only in regard to specific matters or for a specific time. For example, in many cases, limited powers of attorney are used to complete specific transactions rather than to give the attorney-in-fact broad power. Limited powers of attorney are often granted to investment managers to handle the principal’s investments. 

Medical Power of Attorney 

A medical power of attorney allows the attorney-in-fact to make medical decisions on behalf of the principal, including end-of-life decisions. There is a significant overlap between medical powers of attorney and advance health care directives. An attorney-in-fact under a medical power of attorney may also make decisions on the principal’s behalf after they die, including authorizing an autopsy or directing the disposition of their remains. 

How Power of Attorney Becomes Effective

The principal who grants power of attorney has discretion over when the power of attorney becomes effective. 

Durable/Non-Durable Power of Attorney 

A durable power of attorney becomes effective immediately upon its execution and continues even after the principal becomes incapacitated. It is referred to as “durable” because it survives the principal’s incapacity. To make a power of attorney durable, the principal must include provisions indicating that it will continue despite their incapacity, such as “this power of attorney shall not be affected by subsequent incapacity of the principal.” 

A non-durable power of attorney also becomes effective immediately upon its execution, but it does not survive the principal’s incapacity. Once the principal becomes incapacitated or dies, the power of attorney is terminated. Because durable powers of attorney allow the principal’s attorney-in-fact to continue to manage their affairs when they are incapacitated, they are more commonly used for elder planning purposes than non-durable powers of attorney. 

Springing Power of Attorney 

Springing power of attorney does not become effective when it is executed. Rather, it becomes effective only upon the occurrence of a future event or contingency. The future event or contingency is often the incapacitation of the principal. It is referred to a springing power of attorney because it lays dormant until the principal’s incapacity causes it to “spring” forth. The principal of a springing attorney may also authorize the attorney-in-fact (or a third party) to determine whether the specified event or contingency necessary for its effectiveness has occurred. 

The Role of the Attorney-in-Fact 

Principals have broad discretion when choosing a person to serve as their attorney-in-fact. The base qualification to serve as an attorney-in-fact is that the person has the capacity to contract. A principal may appoint two or more attorneys-in-fact who have co-equal authority, but California law requires unanimous consent for multiple powers-of-attorney to exercise authority. Many principals also choose to appoint successor attorneys-in-fact to step in if the original attorney-in-fact resigns, dies, becomes incapacitated, or is otherwise unable to serve. Contact a California power of attorney abuse lawyer to discuss your options for appointing attorneys-in-fact.  

Authority of Attorneys-in-Fact 

The authority of an attorney-in-fact is dictated by the terms of the power of attorney. That power could be as broad as “all lawful subjects and purposes” or as limited as a single matter. If the power of attorney concerns only financial matters, the attorney-in-fact is limited to handling financial matters. If the power of attorney concerns only medical matters, the attorney-in-fact is limited to handling medical matters. 

Attorneys-in-fact may exercise some powers only if the power of attorney expressly authorizes them to do so. This includes: 

  • Creating, modifying, revoking, or terminating a trust
  • Funding a trust not created by the principal with the principal’s property 
  • Making or revoking a gift of the principal’s property
  • Exercising the right to reject, disclaim, release, or consent to a reduction in, or modification of, a share in, or payment from, an estate, trust, or other fund on behalf of the principal
  • Creating or changing survivorship interests in the principal’s property or in property in which the principal has an interest
  • Designating or changing the designations of the principal’s beneficiaries 
  • Making a loan to themselves

Under no circumstances (even if expressly authorized by the power of attorney) may an attorney-in-fact make, publish, declare, amend, or revoke the principal’s will. 

If you suspect that an attorney-in-fact has overstepped their authority with respect to the principal’s affairs or property, you should consider speaking to a California power of attorney abuse lawyer

Legal Duties of Attorneys-in-Fact 

Attorneys-in-fact are considered to be fiduciaries of their principals. Generally, this means that they must act only in the interest of the principal and avoid conflicts of interest and self-dealing. In addition to complying with the terms of the power of attorney, an attorney in fact also has the legal duties to: 

  • Act solely in the interest of the principal
  • Avoid conflicts of interest
  • When dealing with the principal’s property, observe the standard of care that would be observed by a prudent person dealing with someone else’s property 
  • Keep the principal’s property separate and distinct from other property 
  • Keep records of all transactions entered into on behalf of the principal
  • Keep in regular contact with the principal, communicate with the principal, and follow the principal’s instructions (if practicable under the circumstances) 
  • Upon the termination of the attorney-in-fact’s authority, deliver possession and control of the principal’s property as directed by the principal 

While most attorneys-in-fact are required to act according to the “reasonable, prudent person” standard, an attorney-in-fact who has special skills — for example, if the attorney-in-fact is an attorney at law or a financial professional — is required to apply the full extent of those skills to their role as attorney-in-fact. 

Principals Beware: Power of Attorney Fraud and Abuse

Giving another person so much power over one’s own affairs is fraught with risks. While most principals choose a trusted family member to serve as their attorney-in-fact, the authority granted under a power of attorney can easily go to the attorney-in-fact’s head and cause them to make decisions that are in their own interests rather than the interests of the principal. Or, for a less sinister example, a trusted family member may cause significant damage to the principal’s assets simply by virtue of being unfit for the job. 

Power of attorney fraud and abuse generally occurs where the attorney-in-fact breaches their fiduciary duty to their principal. This can occur in a number of ways, such as: 

  • Misappropriating the principal’s assets (such as through embezzlement)
  • Making risky investments of the principal’s assets because doing so would benefit the attorney-in-fact (i.e., conflict of interest) 
  • An attorney-in-fact making a loan to themselves when not expressly authorized to do so (i.e., self-dealing) 
  • Making changes to the principal’s other estate planning documents through fraud or forgery
  • Using the attorney-in-fact’s position of power to exercise undue influence over the principal, particularly in the context of elder financial exploitation 
  • Making medical decisions designed to hasten the principal’s death for the purpose of obtaining an inheritance 

Concerned loved ones have several legal options available to contest power of attorney or compel the attorney-in-fact to act. However, revoking a power-of-attorney without the consent of the principal can be tricky. Generally, courts allow third parties to remove an attorney-in-fact only if all three of the following conditions are met: 

  1. The attorney-in-fact has violated or is unfit to perform the fiduciary duties under the power of attorney
  2. At the time of the determination by the court, the principal lacks the capacity to give or to revoke a power of attorney
  3. The revocation of the attorney-in-fact’s authority is in the best interest of the principal or the principal’s estate

A less extreme option for families concerned about potential financial elder abuse would be to petition a court to compel the attorney-in-fact to submit an accounting or a report of their acts as attorney-in-fact.  

Consult a California Power of Attorney Abuse Lawyer for Help With Your Power of Attorney Issues

If you are considering incorporating a power of attorney into your estate plan or have concerns about the behavior of an attorney-in-fact, you should consider speaking to an experienced attorney. For more information, please contact a California power of attorney abuse lawyer at the Evans Law Firm, Inc., by using our online contact form or calling 415-441-8669 or toll-free at 1-888-50EVANS (888-503-8267).

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