Little Known Secrets of a Power of Attorney
It seems everyone wants a Power of Attorney, even if they aren’t sure what it is or what it does. They just know they should have one. A Power of Attorney designation is a great tool and when used properly it can save a lot of financial hardship and headache. However, an agent appointed by a Power of Attorney has great power and it can easily be abused. Therefore, before executing a Power of Attorney you should ask yourself (1) Do I TRUST the person that I’m appointing as my Power of Attorney Agent and (2) Do I NEED to appoint anyone as my Power of Attorney Agent. If both the trust and the need aren’t there, then why are you giving someone that power over your property?
A few little known facts about a Texas Durable Power of Attorney:
1. If your Agent is going to buy or sell real property (land, a house, etc.) then the Power of Attorney document has to be filed with the county clerk before the sale.
2. A Durable Power of Attorney ends immediately upon the death of the Principal. Meaning as soon as you die, your Agent cannot run to the bank and empty your accounts using the Power of Attorney.
3. The word Durable in the title “a Durable Power of Attorney” means that you are giving the Agent the power to sign in your name, even if you become mentally incapacitated (you go into a coma).
4. There is a version called a Springing Power of Attorney that only “springs” into existence if a certain event happens, such as you going into a coma and two doctors certifying that you are in a coma.
5. An Agent is required to give an accounting to the Principal of all their transactions that they have done on behalf of the Principal. Meaning the son or daughter or friend that you’ve appointed your Agent has to tell you if they’ve signed your name to a contract or sold some of your real estate.
6. You can revoke a Power of Attorney at any time. You can tell your Agent verbally that they are no longer your Agent, and that is valid. However, it’s easier to prove you revoked their power if you do it in writing.
7. Self gifting or self dealing is generally invalid and illegal. If your Agent attempts to transfer the money in your bank account to their own bank account, done for good or bad reasons, it is generally not valid.
If you’re running a small business and needing to make day to day decisions, then appointing someone you trust as your Power of Attorney agent is smart. If you go down, you need someone who can step in immediately and make decisions for your business without waiting for a court to decide a guardianship case.
If you are being deployed overseas, it’s generally a good idea to sign a Power of Attorney for your spouse to be your agent.
If there is dementia or Alzheimer’s in your family history, it’s generally a good idea to sign a Power of Attorney early, while you are still competent and not showing any signs of the disease. Once you have become mentally incompetent, it’s too late to sign a Power of Attorney and your children or spouse may be forced to go the more expensive route of a Guardianship.
When you execute a Durable Power of Attorney to cover your property and contracts, it’s a good idea to look at executing a Medical Power of Attorney and a HIPAA Authorization as well. See our article on Medical Power of Attorney.
Blaise Regan is a Partner at Regan & Frisbie, PLLC, a law firm focusing on Wills, Trusts, Probate, Contracts, Business Formations (LLC, Corporation, S-Corp Designation), Business Disputes, DTPA claims, and Consumer Litigation.
Regan & Frisbie, PLLC is located at 7160 Preston Road, Suite 100, Plano, Texas 75024.
Comments or questions, feel free to email him at Blaise@RFPlawfirm.com or call him at 469.200.4737.
*Nothing in this Article is to be considered as the rendering of legal advice for specific cases, or creating an attorney-client relationship, and readers are responsible for obtaining such advice from their own legal counsel. This article is intended for educational and informational purposes only, and no warranty or representation is made as to the accuracy or completeness of the information contained herein.