5 Reasons an Attorney Should Draft Your Power of Attorney Document
A power of attorney document creates a relationship between 1) a principal and 2) an agent, or attorney-in-fact. In a principal/agent relationship, one individual acts in place of the other. Specifically, the agent acts on behalf of the principal. Once signed and executed, the power of attorney document empowers an agent, or attorney in fact, to make decisions on the principal’s behalf. These decisions often concern the principal’s assets, finances or real property. Because this document creates many legal consequences, you should always consult with an attorney before executing a power of attorney. document Some of the benefits of hiring an attorney to complete your power of attorney are outlined below.
- The document must meet certain requirements before it is deemed legally sufficient. This includes the date of execution, signature of principal, and signature of notary public or two witnesses. There is also specific language and a disclaimer that must be provided and signed under the probate code. Failure to properly complete these requirements may nullify your document.
- The agent, or attorney-in-fact, cannot do what they please with your estate; they have an obligation to make decisions in your best interest, known as a fiduciary obligation.As a fiduciary, the attorney-in-fact, or person serving as your power of attorney, must exercise the duty of loyalty, the duty of care and skill, and the duty to keep the principal’s property separate and identified. An attorney can review this obligation with you and make sure that you choose a person who you trust to act on your behalf.
- You must be legally “competent” or “of sound mind” to sign a power of attorney document. In California, the law dictates that “a natural person having the capacity to contract may execute a power of attorney.” This requirement applies to all contracts, and the civil code states that “all persons are capable of contracting, except minors, persons of unsound mind, and persons deprived of civil rights.” A person is considered mentally competent under the law if they can understand the rights, responsibilities, risks, or benefits involved in decisions, and the potential consequences of what they decide. When you work with an attorney to provide you or a loved one with a power of attorney document, the attorney will help determine whether the client is competent to understand these legal ramifications.
- There are multiple types of power of attorney documents, which can make it difficult to find a generic form online. Power of attorney forms can be general or specific. They can be effective while you are competent, or they can “spring” into effect once a party becomes incompetent. An attorney will help you determine the type of document that best fits your needs.
- Power of attorney terminates upon death. To assign a person to administer your assets after death, you will need to create a will or trust, depending on the type of assets and your specific wishes. An attorney can help to ensure that your assets are protected both during and after your lifetime.
A power of attorney is a vital part of any estate plan, ensuring that decisions can be made on your behalf if you are rendered incompetent due to illness or accident. Because a power of attorney document allows someone else to control your finances or private affairs, always consult with an attorney before executing such documents. An attorney can assess your obligations under the particular contract to ensure that your rights are protected. Without attorney assistance, you may execute a document missing the legal requirements necessary to transfer power to your agent, rendering any actions on your behalf void. Contact our office today at (833) 4-CAL-LAW for a free consultation and to get your power of attorney started.