Questions About Trusts
Questions About Estate Planning
Life Ins. Trusts
Restatement of Trust
Special Needs Trust
The Procrastination Page
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Dying without a Will
Reading of the
LGBT Estate Planning
Tenancy in Common
The California Durable Power
of Attorney for
What is it?
A financial power of attorney allows an agent to conduct financial
transactions for the principal (the person who signed the power of
attorney.) These transactions might include depositing or withdrawing
money from bank accounts, signing income tax returns, or transferring
assets to a trust. This type of power of attorney can also be used for
selling assets, such as real property, or making investments.
If you have a trust,
should you also have a durable power of attorney?
Yes. Although a successor trustee can manage the trust assets if the
trustor becomes incompetent, there are many financial matters that take
place outside of the trust. For example, although a successor trustee can
file income tax returns on behalf of the trust, he or she cannot file a
personal income tax return for the trustor. The successor trustee also
cannot transfer assets to the trust, but the agent under the power of
attorney may have the power to make the transfers.
What are the dangers
involved? The powers given to the agent are often
very broad and can give the agent complete control over the principal's
assets. For that reason anyone who signs this type of power of attorney
should carefully review his or her choice of agents and consider limiting
the power of attorney to certain transactions. A "springing" power of
attorney can also be used. This type of power of attorney will not take
effect until a person becomes incompetent, as certified by physicians.
Why is it called
"durable?" Until 1979 in California, all powers of
attorney became invalid if the signer of the power of attorney became
mentally incompetent. In other words, when the power of attorney was
needed the most, it was no longer valid. In 1979, the California
Legislature enacted a new type of power of attorney that is known as
"durable" because it does not become invalid if the signer becomes
Will a power of
attorney avoid the need for a conservatorship?
Conservatorships are usually required for anyone who has become mentally
incompetent or who no longer has the ability to manage his or her
financial affairs. There are two aspects to a conservatorship, the right
to control the conservatee's financial affairs, and the right to control
the conservatee's person, such as deciding where the conservatee will
live. A durable power of attorney allows the agent to control someone's
financial affairs, but gives the agent no control over the conservatee's
person. In many cases the power of attorney may be all that is needed if
the principal is immobile, bed-ridden, or in a coma, etc. But if the
principal cannot be prevented from wandering the streets at night, or
giving away his or her money to strangers, for example, a conservatorship
will be needed.