At different stages in your life, you may find it helpful for another person to manage your affairs. Perhaps you’re very busy, or you’re going abroad for a while, and you want someone to handle your finances. Or, you may be concerned about making decisions on financial and medical matters when you’re old and incapable.
The answer in both cases is to give a trusted relative, friend, or colleague power of attorney. With this power, they, the agent, are legally permitted to act on behalf of you, the principal.
Used correctly, power of attorney is a practical and convenient solution. But you must understand what you’re doing, what legal language to use, and which type of power of attorney suits you best. For that reason, we’ve put together this easy-to-understand guide to the subject.
We’ll explain all the different types, the specific rules in California, the benefits, and common mistakes to avoid. So read on for a definitive introduction to power of attorney in California.
There are two clear and distinct scenarios where you might consider a power of attorney. The first is when you simply need someone to manage your financial affairs. You might want an agent to oversee your stocks, shares, and trading on your behalf. Or, maybe your work is taking you overseas for a couple of years, and you want someone to collect the rent from your investment apartment. Giving power of attorney to a trusted partner fits the bill.
The other scenario concerns estate planning and what happens should you become incapacitated in the future. It’s entirely possible to draw up a power of attorney that’s never actually used. But having one in place, just in case, provides security and certainty for both you and your family.
A small amount of planning and foresight can have a hugely beneficial impact. Not having to worry about finances is one less hassle for you and your family if anything does happen, and it spares your loved ones any anguish over tough medical decisions. Just don’t leave it till it’s too late: you and your family can’t apply for power of attorney if you’re already incapacitated.
At the highest level, the legislation across all 50 states is broadly similar. As ever, though, it’s crucial to be aware of the little nuances and differences. Accordingly, if you draw up a power of attorney in another state and then moved to California, you should get it checked out to verify that it’s still valid. State laws do change too, so it’s not a bad idea to revisit agreements periodically.
Specifically, in California, you need to use the official state forms for financial or medical power of attorney. There are also certain conditions around who can act as witnesses; plus, if real estate transactions are involved, the agreement needs to be notarized. An expert family law attorney can describe these features in greater detail.
There are four types of power of attorney available in California. They can and do overlap, and the one that’s appropriate for you depends on your exact circumstances:
A general power of attorney is suitable when you want your agent to have authority over managing your financial affairs immediately. In this instance, if you become incapacitated, a power of attorney may lapse - unless you specify otherwise, and make the agreement durable.
A general power of attorney is also applicable if you want someone to take responsibility for your affairs should you become infirm in the future.
You may feel uncomfortable about granting full powers to your agent, in which case a limited power of attorney may be a better solution. You can specify the areas where the agent’s powers apply. An example of a limited, durable power of attorney might outline something like the agent being allowed to write checks up to $1,000 and that the arrangement may continue should the principal become physically or mentally infirm.
A medical power of attorney is likely one of the most critical forms because it allows your agent to make serious or even life-ending decisions about your medical care. Some principals outline exactly what they want to happen - for example if they were on a life-support machine - thus sparing loved ones any stress over the decision.
The default position with a power of attorney is that it ends if the principal becomes incapacitated. This is a common-sense step intended to protect their interests. If you wish your agent’s power to continue if you become ill or unable to attend to your affairs, you must specify a durable power of attorney in your agreement.
However, many people draft a power of attorney that only kicks in should they become incapacitated, in which case the above scenario doesn’t apply.
There’s nothing to stop you from using an online form to draw up a power of attorney. But many people conclude that a safer, more secure approach is to work with a trusted family law attorney. Nowadays, there’s a more than ever choice of law firms, so make sure you choose one that’s knowledgeable, friendly, responsive, affordable, and with a modern outlook.
A family law lawyer will ensure that your power of attorney complies with the latest state legislation, is legally watertight, and does exactly what you expect. What’s more, the best family law attorney can also help you with other aspects of estate planning, including wills, living wills, trusts, and probate.
In the end, having a power of attorney is all about peace of mind, first in drawing up the agreement and second, how it’s implemented. With such an important document, you must get everything right. So call the experienced family law team at Marble now for a free case consultation to ensure your power of attorney is fully legal and matches your exact needs.