If I’ve seen one General Durable Power of Attorney, haven’t I seen them all?
If you have previously executed a General Durable Power of Attorney, even if it was drafted by an attorney, don’t be lulled into complacency and believe that it will be available and acceptable to third parties when you need it most. Many people may think that all General Durable Powers of Attorney are “created equal," but that simply isn’t the case.
What is a statutory Power of Attorney?
There is a statutory Power of Attorney that is often used by many attorneys, even some who offer estate planning services specifically. The form of this type of Power of Attorney was created by the North Carolina legislature and is normally not changed much by the attorneys who recommend this type of Power of Attorney. Although this statutory Power of Attorney appears to recite all the powers needed for one person (the “Attorney-in-Fact") to act on behalf of another (the “Principal"), in reality it is seldom accepted by financial institutions and other third parties and hence is never there when you truly need it. The reason it is seldom accepted is because it refers to sections of the North Carolina General Statutes and the powers expressly stated within them, but only authorizes general power over “real estate" and “banking transactions" (for example). Since the document itself does not expressly state what powers relating to “real estate" or “banking transactions" (for example) are authorized, financial institutions and others relying on the authority granted in the statutory Power of Attorney lack the express information needed (on the face of the document) to know whether the transaction your Attorney-in-Fact is attempting to make is authorized. Moreover, you may wish to provide additional or expanded authority in your Power of Attorney, beyond the authority provided by general statute.
What is the preferred form of Power of Attorney?
The better and recommended form is a long-form Power of Attorney which expressly states, in detail, the authority granted to your Attorney-in-Fact with regard to each type of financial interest you may own during your lifetime. This long-form Power of Attorney may seem robust, and even daunting, as it normally is at least 10 pages long; however, since the authority granted in the document is express regarding the details, financial institutions and other third parties are much more willing to accept this type of Power of Attorney when you need it most.
Ultimately, most people do not even try to use a Power of Attorney until the Principal (who executed the document) is unable to handle his/her financial affairs, requiring the named Attorney-in-Fact to step in and handle things instead. If the Principal is incompetent and financial institutions and third parties refuse to accept the previously executed statutory Power of Attorney, it is too late for the Principal to execute a new long-form Power of Attorney that would be accepted. Instead, at this point, your family’s only option is to have the Principal determined legally incompetent through a court-supervised guardianship proceeding, at which point all of the Principal’s financial affairs are subject to court-supervision until the Principal’s passing.
How do I make sure I have the right Power of Attorney?
Why spend any amount of money on a statutory Power of Attorney that may not be worth the paper it is printed on when the time comes that it is needed? Additionally, why subject yourself to the potential length and expense and publicity of a guardianship proceeding? Instead, make sure you find an experienced Estate Planning & Elder Law attorney who has taken the time to put together a well-drafted long-form Power of Attorney that will work for you when you need it most. After all, not all General Durable Powers of Attorney are created equal.