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Money October 2017

Legal Ease

The Power – Or Not – Of the Agent for Your Power of Attorney

By Jonathan J. David

Limiting the powers that your agent [with a power of attorney] would have in a financial durable power of attorney is not the answer because you want your agent to be able to act on your behalf, whatever that entails, if you cannot act for yourself.

Dear Jonathan: I understand the need for a durable power of attorney, but I am reluctant to give someone that much power over my financial affairs. Can I limit the powers I give my agent to reduce the possibility of potential abuse by my agent? If not, do you have any other suggestions?

Jonathan Says: You are right in that the agent named in a financial durable power of attorney has a great deal of power. However, limiting the powers that your agent would have in a financial durable power of attorney is not the answer because you want your agent to be able to act on your behalf, whatever that entails, if you cannot act for yourself. Further, limiting an agent’s power could render the financial durable power of attorney ineffective in many respects and require that a conservator be appointed to act for you in those instances where the power of attorney is lacking.        

The best way to reduce the risk of an agent abusing the powers granted in a financial durable power of attorney is to make sure that you name a trustworthy agent. Also, you should not give your agent a copy of the durable power of attorney until you actually need that agent to act for you, which will help limit your exposure.

Finally, you could take the additional step of drafting a financial durable power of attorney which becomes effective only upon your disability. This is known as a “springing durable power of attorney” because it would only become effective upon your disability as opposed to a non-springing durable power of attorney which becomes effective as soon as it is signed.

Using a springing durable power of attorney, however, will require your agent to provide evidence of your disability before acting on your behalf. Although this isn’t necessarily a bad thing, it will limit that agent’s ability to act immediately for you if something needs to be done right away because your agent first has to provide evidence of your disability before he or she will be able to act on your behalf. This evidence typically consists of a letter from your doctor verifying your disability.

 

Dear Jonathan: I prepared a financial durable power of attorney many years ago. The person I named as my agent recently died. I did not name any other agents in the document. Who would act as my agent in the event something happened to me?

Jonathan Says: Since you did not name any alternate agents to act in the event your primary agent could not act, that power of attorney is now useless and is of no value to you. Consequently, since there is no agent named in that document to act on your behalf, then in the event of your disability, someone would have to petition the probate court to be appointed your conservator in order to allow someone to handle your financial affairs on your behalf.

I recommend that you prepare a new durable power of attorney and this time name not only a primary agent, but at least one alternate agent who can step in and act if the primary agent is unable or unwilling to act on your behalf. The agents you name should be people who are not only willing and able to act if the need arises, but people you trust to act in your best interests.

I also encourage you to prepare a durable power of attorney for health care, if you haven’t done so already. This power of attorney allows you to name a patient advocate to act for you regarding your personal and medical care if you are unable to act for yourself. If you prepare this type of power of attorney, you should also name at least one alternate patient advocate to act in the event your primary patient advocate is unable to do so. Good luck.

 

Jonathan J. David is a shareholder in the law firm of Foster, Swift, Collins & Smith, PC, 1700 East Beltline, N.E., Grand Rapids, Michigan 49525.

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