Background. You will
want to consider a durable (financial) power of attorney when you engage in
estate and disability planning. You will
be giving your agent the ability to do much that you, if personally present,
could do. You may appoint your agent
under a “general power of attorney” – with lots and lots of authority -- or a
“limited” or “special” power of
attorney; for example, a special power of attorney may authorize your
agent to sell a car or your home only. Do
not ever appoint as an agent someone you do not trust. Some people do appoint a relative who is not
really trustworthy as agent – this is probably magical thinking: “If I become
incapacitated, surely Johnny Boy, my son, will see the light and behave
properly.” Really? Would you tell your best friend to do this?
Texas has adopted the Uniform Power of Attorney Act (set
forth in the Estates Code), including a form (suggested) and the “short form”
powers. For example, the short form
power “real property transactions” which is on the actual power of attorney is
defined in the Estates Code as granting to the agent a great deal of authority,
including the power to: “sell, exchange, convey with or without covenants,
quitclaim, release, surrender, mortgage, encumber, partition or consent to
partitioning, subdivide, apply for zoning, rezoning, or other governmental
permits, plat or consent to platting, develop, grant options concerning, lease
or sublet, or otherwise dispose of an estate or interest in real property or a
right incident to real property”.
If you choose all of the short forms, you will have granted so
much authority to your agent that, colloquially, you will be said to have a
“general power of attorney”. (Starting
January 1, 2013, you must initial before each power you want or initial at the
end if you want your agent to have all of the listed powers.)
Unless you choose, using the statutory form or a variation,
to make your agent’s authority last beyond your incapacity (effective when you
sign it and good even if you are incapacitated – “durable”) or become effective
on your incapacity (“springing”), your agent’s authority ends if and when you
become incapacitated. Your Power of
Attorney is not effective after your death.
Discussion. Co-Agents? Living Revocable Trust? If you do not have someone who is trustworthy
who you can appoint as an agent, consider a revocable trust (also called as a
“management trust” and a “living trust.”)
With a revocable trust, you can appoint Co-Trustees and require them to
act jointly or allow each to act separately.
If you have someone you trust, you also may appoint one
agent or more a Co-Agents and require the Co-Agents to act jointly or allow
each to act separately.
BUT, please note that
banks and other financial institutions may not want to be responsible for
making sure that Co-Trustees or Co-Agents actually act together. Recently, two children of a client of our
firm were required under the power of attorney he had done years ago to act
jointly. The bank refused to honor the
direction that they act jointly (apparently, due to concerns about liability). Instead, before the bank would allow them to
act at all (even jointly), the bank required that each sign an indemnification
agreement confirming that the bank was not responsible for making sure that
each signed checks or jointly gave transfer and other instructions and also required
each to indemnify the bank against any complaints one might have against the
other as a Co-Agent.
What do you do to plan for your Co-Agents and/or Co-Trustees
refusing to act jointly, especially when the bank is likely not to require
joint actions? Consider asking your
attorney to draft in your Power of Attorney or Revocable Trust a plan to be
triggered if this happens, like granting to the Agent or Trustee who is
following the rule the right to go to
court without notice to the Agent or Trustee who is taking unilateral
actions and get a temporary restraining order (“TRO”); authorize the Agent or
Trustee who is following the rules to invoke a mandatory mediation or
arbitration to be paid for from funds of the principal (who signed the power of
attorney) or Trust; include a provision that if a Co-Agent or Co-Trustee who is
required to act jointly acts unilaterally, that the Agent or Trustee will be treated
as having resigned and an alternate treated as succeeding as Co-Agent or
Co-Trustee; and look into whether a bank will allow the Co-Agents or
Co-Trustees to pen a so-called safekeeping account (by court order or
otherwise) where nothing will be released to pay bills unless both have signed.
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