All Powers of Attorney are not alike. Some Powers are durable,
others aren't. Some Powers name one "Agent"-the person
granted authority to act for another individual, called the
"Principal." Some name multiple, alternate Agents-Agents
who will serve if the primary Agent is unable or unwilling to
serve. Some name co-Agents.
Under a new law, co-Agents can be "several," meaning
that each co-Agent can make independent decisions for the Principal
without consulting the other Agent, or co-Agents can be "joint,"
meaning that the co-Agents have to make decisions together.
A Power can be effective "immediately," meaning that
once the Principal signs the Power, the Agent can make financial
decisions for the Principal, or a Power can be effective only
upon the Principal's disability. This is called a "springing"
Power of Attorney.
So, there are a number of options. But what do they mean for
you and what type of Power of Attorney should you choose?
Because none of us know if disability will strike us or when,
a Power of Attorney could prove to be the most important document
we will ever sign. Since it is such an important document, you
should fully understand your options.
Do I sign a Power of Attorney that is effective immediately
or springing? I typically recommend that people make their Powers
effective immediately. Yet, by making it effective immediately,
you are imposing a tremendous amount of trust in your Agent,
so you should choose your Agent wisely. If you don't feel completely
comfortable giving someone that authority, you could sign an
immediately effective Power of Attorney but refrain from giving
the Agent a copy of the document. Tell the Agent you've signed
the Power and tell them where they could find it in the event
they needed it.
If you still don't feel comfortable signing a Power of Attorney
that is effective immediately or if other reasons make such
a Power imprudent, you can sign a springing Power. If, however,
you are going to say that the Agent can only act if you are
"disabled," then you better define disability in the
document. For example, you could say "disability"
exists when two physicians or a court have declared the Principal
disabled.
With Agents, I typically recommend that people name multiple,
alternate Agents. In this way, if the primary Agent is unable
to serve, other Agents can step in to serve immediately and
take up the job where the initial Agent fails. Sometimes, people
feel more comfortable naming co-Agents. Perhaps they have two
children, and they don't want to be perceived as favoring one
child over the other.
As I mentioned, co-Agents can be several or joint. Joint co-Agents
could pose a problem. What if the co-Agents don't agree. Since
they must agree on each financial decision being made, if you're
going to choose joint co-Agents, you better think about this
question, and you might want to put a provision in the Power
to deal with such situations. If your co-Agents are several,
what happens if one co-Agent makes a decision regarding your
investments one day and the other co-Agent makes a different
decision a week later.
Co-Agents do present a greater possibility of conflict or conflicting
decisions. If all you're worried about preventing with co-Agents
is hurt feelings, you could always name alternate Agents in
descending order, based upon the age of the children.
Lastly, if you're planning for disability, be sure that your
Power is "durable." A durable Power of Attorney remains
effective if and when you become disabled. A non-durable Power
would lose its effectiveness if you ever became disabled.
