Do I need a Power of Attorney (POA) to take care of my parents? How to get Power of Attorney in California? What are the dangers in giving someone a Power of Attorney? How can I limit a Power of Attorney? What is a Durable Power of Attorney California (DPOA)? What is a General Power of Attorney? What is a Springing Power of Attorney, and Limited Power of Attorney California? Can I delay the date a Power of Attorney becomes effective? What is the difference between a Power of Attorney and a Conservatorship? How do I apply for a Conservatorship? What triggers a Conservatorship?
By James L. Cunningham Jr, Attorney-at-Law
When you give someone a “Power of Attorney” (POA) you are giving them “agency authority:” the power to act in your name. This means that they can have the legal power to act as if they were you and do all sorts of important stuff on your behalf.
Please proceed with caution: A POA can be absolutely necessary or extremely risky…or both! Your designated Agent or “Attorney-in-Fact” can sign documents that obligate you to things. They can move your money where they like. They have the authority to buy and sell properties in your name—and much more, depending on the boxes you may have hastily ticked on a California Power of Attorney form.
Think of a POA like a potent prescription drug. Used properly, and in the right dosage, it can get you through difficult times. But if used improperly, abused, or given in too high a dose, a POA can do irreparable harm.
Let’s start by explaining that a “Power of Attorney” has nothing to do with attorneys. It is a piece of paper, often a two or three-page form easily downloaded from the internet (see below), which you sign in front of a notary. In that paper, you assign specific powers to your Agent. Other “lawyer drafted” POAs can be more than 30 pages long. Legally, these powers are known as “powers of attorney,” but your Agent is not required to have any legal training, a family connection, or other roles in your Estate.
Once you sign a General POA, your Agent can legally take actions in your name without your knowledge—and without mandatory oversight of any court, governmental agency, Bar Association, or other institution.
We strongly suggest consulting with a qualified attorney before assigning powers of attorney. Contact CunninghamLegal for comprehensive Estate Planning in California.
Elder Power of Attorney Fraud
Elderly people can make the mistake of signing over Powers of Attorney to hired caregivers, untrustworthy neighbors, “new best friends,” and others who should never be given such powers. This happens so much that many states have written Financial Elder Abuse laws to protect seniors and dependent adults.
Indeed, people getting out of jail are often advised to become caregivers to the elderly because the elderly, or their loved ones, often do not request background checks be completed. Charming former convicts may succeed in getting a confused senior to sign a POA giving the caregiver full powers over their finances. Other family members often don’t know this has occurred until it is too late and assets have been drained.
In theory, your Agent is legally obligated as a fiduciary to act only on your behalf, but in reality, because no one is watching, they can pretty much do as they please. In my firm, we have sometimes seen elder fraud performed by people with Powers of Attorney.
Grandma’s New Helper Helps Herself to a POA
Grandma wants to live alone, so the kids work hard to get her a full or part-time helper to offer support. They call a couple of references provided by Lucy and hear only glowing reviews over the phone. Lucy is a delightful young woman, she takes care of the house, helps Grandma with her personal needs, and over the course of six months or so, Grandma begins to feel real affection for her. Lucy begins running errands for Grandma to the store and maybe drops off deposits at the bank. Then she starts helping pay her bills. Little by little, Grandma’s kids start paying less and less attention to what’s happening, since Lucy is doing such a terrific job.
One day, Lucy goes online and downloads a Durable Power of Attorney form and slides it under Grandma’s nose. She’s already checked off all the boxes and filled in all the information. She’s also brought along an unscrupulous notary. “Could you sign this for me? Then I could help pay the bills and stuff for you a lot more easily.” Grandma smiles at the formality of having the notary present, but happily signs.
The kids hear about none of this. But two months later Grandma’s bank account reads $0. Her investments have been liquidated and transferred to multiple accounts, which were then drained and closed. “Lucy” has disappeared. Chance of recovery? Nil.
This is not a rare occurrence. But you need to be cautious, not afraid: POAs can be used for good, not just evil.
Do I Need a Power of Attorney in Case I Get Sick?
Despite the dangers in a POA, you should consider creating a Durable Power of Attorney naming a truly trusted person in case you become mentally incapacitated or otherwise unable to act on your own behalf. Indeed, in most cases, despite the dangers, most people choose to create a Durable Power of Attorney as part of their Living Trust-centered estate plan.
Without a POA in place, who would pay your bills? Who would pay your taxes? Who would sign your income tax return? Who would handle the thousand other legal and financial details you would be unable to handle yourself?
You might be thinking “doesn’t my living trust handle all that?” The answer is no. Your trustee can sign your individual income tax return, but cannot deal with your IRA and 401(k) while you are alive, and generally cannot deal with assets that are not in your living trust.
Anyone over 18 should consider signing a California Durable Power of Attorney, but take the time to understand the issues thoroughly, use the right kind of POA, with the right kinds of limits, involve close family in your decision, and get professional advice before you sign anything.
Above all, make sure you fully know and fully trust the person you appoint as your Agent.
Do I Need a Lawyer to Create Powers of Attorney?
Simply stated, you should always seek legal counsel before signing an important, powerful document like a Durable Power of Attorney.
This article lists the different kinds of Powers of Attorney in California, clarifies the relationship of POAs to Trusts, explains the crucial difference between a POA Agent and a Trustee—then spends some time showing how a Power of Attorney is different from a Conservatorship for an elderly or incapacitated person.
Along the way, I hope you will realize that these important documents, legal relationships, and life decisions should not be approached as do-it-yourself projects. Without qualified professional advice from a qualified estate lawyer, it’s far too easy to make a mistake that can have terrible consequences for yourself and your loved ones.
At my firm, CunninghamLegal, we work with families to develop the right Powers of Attorney and other crucial Estate Planning documents, tailored to individual life circumstances. We have offices throughout California with expert estate attorneys and we invite you to contact us for help and advice as you approach these vital issues.
Financial Power of Attorney California: What Are the Different Types of Powers of Attorney?
There are four basic kinds of Financial Power of Attorney—and a fifth kind just for healthcare decisions. It’s crucial to understand the differences and choose the right path—then revisit that path regularly.
The “Uniform Statutory Form Power of Attorney” (see below for California’s version) is a state-specific form that is developed by a state legislature and is generally freely available online. These contain standard, state-approved, statutory language. However, in most cases, I recommend using an attorney to help you complete the form (or draw up a custom Power of Attorney which contains specific, individualized language) because these forms are confusing and frequently are incorrectly filled out.
- What is a General Power of Attorney? A General Power of Attorney typically kicks in as soon as it is signed and gives broad powers determined in the document, often by checkboxes. If I downloaded a General POA form from the internet, wrote in your name as my Agent, checked all the boxes, and signed it in front of a notary, you would instantly become my “Attorney-in-Fact,” able to drain my bank account, sell my house, and take out a loan in my name. I would truly be giving you the keys to my kingdom. Unless it was a “Durable” POA, however, the document would become invalid as soon as I became incapacitated. This can create significant confusion, which is why most people create a Durable Power of Attorney even while they are well.
- What is a Durable Power of Attorney (DPOA)? A Durable Power of Attorney can be “General” or limited in scope, but it remains in effect (durable) even after you become incapacitated. A Durable Power of Attorney is the most common type of POA that people sign as part of their Estate Planning because they feel they need to give someone the power to handle their affairs if they become unable to act for themselves. If you don’t have a Durable POA in place and you become incapacitated, your family may have to go to court to have themselves or another appointed as a “Guardian” or “Conservator” for you (more on that below). This is an expensive and time-consuming process. In California, most conservatorships exceed $10,000 in fees and costs in the first year alone. Because they are the most common instruments, the bulk of this article will deal with Durable Powers of Attorney.
- What is a Springing Durable Power of Attorney? A Springing Durable POA is similar to a regular Durable Power of Attorney, but “springs” into effect either when you become incapacitated (in which case the POA ceases to function if and when you recover) or when you sign a Certificate of Authorization that activates the POA. A Springing POA sounds safer and better in theory, but in practice it can lead to problems because your Agent will have to get a “determination” of your incapacity from a doctor before using their representative powers. This can be further complicated by HIPAA privacy laws, and there’s always the question of what, exactly, constitutes incapacity. Will others in the family agree? For these reasons, most people simply give a Durable Power of Attorney, effective immediately upon signing, to someone they deeply trust, or use the Certificate of Authorization.
- What is Special Power of Attorney or Limited Power of Attorney in California? A Limited or Special POA permits your attorney-in-fact (Agent) to act only in highly specific circumstances, for highly-specific purposes, or a limited period. For example, if you need someone to act for you in a legal matter while you are on vacation, you could give them a Special Power of Attorney just for that action. Or you could give a business partner the right to sign documents in your name while you undergo a serious medical procedure. You should definitely see a qualified lawyer to draft such a POA.
- What is a Durable Power of Attorney for Healthcare? In this specific POA for Healthcare you give someone the power to make medical decisions (not financial or other decisions) for you when you are unable to make those decisions for yourself. Some other names for similar documents are “Medical POA,” “Health Care Proxy,” or “Advance Healthcare Directive.” In some states, like California, healthcare POAs can be combined with a “Living Will” which sets out your desires for when you are gravely ill and close to the end of life.
California Power of Attorney Requirements: How to Get Power of Attorney in California
You may be surprised to learn that there are no special qualifications for a person to qualify to be designated as an “attorney-in-fact” or Agent with the Power of Attorney. It could be a relative, a spouse, a friend, a neighbor, or indeed any adult over 18. No law degree or references are required. How to obtain Power of Attorney in California? All that’s needed is for the Principal to sign a “Uniform Statutory Form Durable Power of Attorney,” check off the boxes indicating the type of POA and its limits, then sign the document in front of a Notary Public. We provide a link to the simple Power of Attorney Form for California here, but before you download it, please read this entire article regarding the dangers of using this powerful document without a proper understanding of the consequences.
Do Powers of Attorney Continue After Someone Dies?
No. Importantly, even Durable Powers of Attorney apply only while you, the “Principal,” are alive. Once you die, the powers you granted to your Agent instantly cease, and only what’s in a Will or Trust matters.
How Do I Terminate a Power of Attorney?
If you grant a Power of Attorney to someone and then change your mind, can you fire them? Yes, by properly notifying them in writing—but unless they actually receive that notification, they still have authority. Let me repeat that: If you can’t find the person, or they are dodging you, they will still have authority and can continue to manipulate your assets or bind you to contracts. Until they receive your notice, they will still be acting within the law. When you send a termination notice, send it by certified mail, and also send copies to financial institutions or others who might need to know.
Note that in most states if you and your POA Agent were married (a common situation), then a POA will automatically end if you get divorced. Still, if you get divorced, it’s best to formally terminate the old POA with notice.
How Is an Agent with Power of Attorney Agent Different than a Trustee? Does an Attorney-in-Fact Have More Power than a Trustee?
It’s important to understand the significant difference between an Attorney-in-Fact under a POA and the Trustee of a Living Trust or other kinds of Trust. By understanding this difference, you can set up some boundaries and safeguards to protect you if you become incapacitated. The strategies get a little complicated, and you definitely want to consult with a qualified lawyer, but here are the basics:
When you create a Trust, you are creating a kind of bucket to contain some of your assets, but possibly not all your assets. That bucket is held and controlled by a Trustee, and it has an independent legal life of its own. While you are alive, you will likely be the Trustee of your Trust, and you can assign Successor Trustees for when you become incapacitated or die.
Importantly, the power of a Trustee is derived only from the Trust and is limited by the Trust. Trustees control everything inside the Trust bucket, but nothing outside the bucket. For example, your house may be in the Trust, but your IRAs probably are not. Since the IRAs are not in the Trust, the Trustee has no control over them.
Just as importantly, a Trustee is legally bound by the terms of the Trust—the rules set out when the Trust was first created—and they must act for the good of the Trust’s Beneficiaries. They are designated as a “Fiduciary,” which means they must act responsibly, keep financial records, and maintain the Trust properly for those Beneficiaries.
On the other hand, an Attorney-in-Fact (Agent) created by a POA is bound by vastly fewer rules. In practice, they can pretty much do anything they want with your assets. They can even legally bind you to obligations. They are still a “Fiduciary,” but there are no specific instructions or rules for them on what to do, as there would be in a Trust.
Your POA Agent will likely control everything you have not put in a separate Trust. If you also have a Trust, your POA Agent may or may not get control of that as well (depending on the language in the Trust), but at least with the assets in the “bucket,” they will have rules to follow which could be enforced in court if necessary.
Your POA Agent, for example, will likely have the power to borrow money in your name. Trusts generally cannot borrow money, and banks typically will not lend to Trusts at all.
Everyone’s circumstances are different, and all of us have varying degrees of confidence in those around us. That’s why you need to talk through the options with a good lawyer.
How Do I Use My Durable Power of Attorney If My Parent or Spouse Becomes Incapacitated?
If your parent or other loved one has signed a Durable Power of Attorney naming you as their Agent or “Attorney-in-Fact” then you may need to get a letter from a doctor stating that they have become significantly incapacitated and are unable to act for themselves. You should then be able to act on their behalf at financial institutions, government agencies, and other stakeholders by presenting your POA along with the doctor’s letter.
Does My Spouse Automatically Have Power of Attorney for Me If I Get Sick?
No. If you are incapacitated, your spouse will only be able to fully control assets that are jointly owned or in a Trust for which you two are co-Trustees or your spouse is Successor Trustee. But he or she will not be able to, say, sell a property that is only in your name. Or manage an IRA that is only in your name. Or access a bank account that is only in your name. Unless there is a Power of Attorney in place, it will all depend on the titling of each specific asset. That’s why spouses usually (but not always!) sign mutual Durable Powers of Attorney during an Estate Planning process. In terms of healthcare decisions, in practice, doctors and others will likely listen to the decisions of your spouse, but in principle, you would need to give them a Healthcare Power of Attorney to make healthcare and end-of-life decisions for you. By not doing so, you risk confusion and uncertainty when decisions need to be made—including challenges to your spouse’s authority by other family members.
What If I Don’t Have a Power of Attorney and My Parent or Spouse Becomes Incapacitated?
If your parent or other loved one did not sign a Durable Power of Attorney while they had their mental abilities, and they have now become mentally incapacitated, you may feel you must petition a Probate Judge for a Conservatorship so you can take control of their finances on their behalf. A Conservatorship is a big deal, and applying to become the Conservator of another person is appropriately a difficult process because the courts are very reluctant to strip a person of their legal rights and assign them to another, even to a loving spouse or adult child.
In general, the standard for the court to grant a Conservatorship is that the principal has lost mental capacity to the extent that they are “substantially unable to resist fraud, duress, menace, or undue influence.”
Why is the law phrased that way? Because it sometimes happens that a person with dementia or other mental incapacity loses the judgment to resist hucksters—who specifically look for targets with dementia. If your parent suddenly wants to invest all their savings in an oil well being developed by their day nurse’s brother-in-law, you may need to seek a Conservatorship. This will be time-consuming and painful, but you may have no choice.
If you go that route, remember that because of the potential for abuse and fraud by Conservators themselves, they are closely regulated by the State, and in California, they must follow the rules within the extremely lengthy California Handbook for Conservators.
Does a Conservatorship Include Control Over a Trust?
Just as an Attorney-in-Fact or Agent under a Durable Power of Attorney does not necessarily control assets within a Trust created by the person with incapacity, a Conservator may not have that control either. It depends on the language of the Trust and the Successor Trustees named within the Trust.
In general, a Conservator would only have control over assets not in a Trust, such as annuities, life insurance, 401(k)s, IRAs, and so forth.
Power of Attorney vs Conservatorship: What’s the Difference?
The difference is enormous. A Power of Attorney, signed by a person (the Principal), gives power to another person to act as an Agent when the Principal is unable to act for themselves—that power is generally limited to financial matters and that power can be terminated at will. A Conservatorship is a major legal action in which the rights of the Principal to make any decisions for themselves can be completely taken away by a Probate Court due to mental incapacity, and a Conservator is named by that Court to fully manage the life of the Principal. In a Conservatorship, the Principal typically loses their right to have control of their property, the right to vote, the right to marry, the right to decide where to live, and the right to make their own healthcare decisions. Indeed, a potential Conservatee can demand a jury trial before these rights are taken away.
That said, a Conservatorship is sometimes a necessary and good thing. And unlike Agents with Powers of Attorney, a Conservator is checked by the court and must account to the Court through an oversight system. People do lose capacity, and sometimes, others must be given the power to act on their behalf.
Attorneys Have a Responsibility to Prevent Elder Abuse
I will tell you that we frequently have our own clients’ children come into our office asking us to help convince an elderly parent to give the child an immediate Power of Attorney or to help them obtain a Conservatorship over a parent. As attorneys, we are ethically bound to act in the best interest of the client – usually the parent. We treat all such requests delicately while maintaining confidentiality because the last thing we want to do is be an accessory to elder abuse. We take this responsibility very seriously—and we have rejected some such requests. In other cases, when it seems appropriate, we will have a parent sign a Durable Power of Attorney that is effective immediately, naming a trusted child or loved one to serve as Agent or Attorney-in-Fact.
We are also very careful and skeptical when a client comes to us and says, “You know, I’m all alone and it’s getting hard for me to get to the store or the bank. I’ve met this lovely gentleman who has moved in with me and has begun taking care of me beautifully. He says I should sign a paper so he can go to the bank for me. Can you tell me what to do?”
What Should I Do If I Think Someone Is Abusing their Power of Attorney?
If you think someone has obtained Powers of Attorney through undue influence, or if you think they are using those powers to abuse or steal from someone, you should contact your local law enforcement department and tell them what you know. This includes suspected issues with a friend or neighbor—you don’t have to be a family member to report a possible crime. Law enforcement may then choose to contact Adult Protective Services to investigate further. Elder abuse and fraud are real and major problems in our society. As the saying goes, “If you see something, say something.”
Do I Need a Power of Attorney If I Have Logins to My Parent’s Financial Accounts?
This is a difficult and gray area of the law. If your parents are sitting by your side and approving everything you do for them online, then you might get away here and there without having a Power of Attorney. Similarly, if you are picking up their medications with their credit card, and they know and approve of that action, you may be fine. On the other hand, if you are taking actions in their name of which they are unaware, then you definitely need a signed POA giving you the legal right to act in their name, even if you are just logging into their accounts online. Don’t take the risk of conflict with siblings or others who may not accept your word on all these actions.
Do Your Homework and Consult with Experts About Powers of Attorney in California
The bottom line on POAs? Like all instruments of the law, they can be used properly or improperly. Do your homework. Consult with a qualified attorney. Discuss the issues with friends and family. Don’t act hastily when making decisions about your POA. Be sure all of your questions are answered and that you have a clear understanding of how your specific POA works.
What Do We Do as California Estate Planning Attorney Specialists?
The lawyers and staff at CunninghamLegal help people plan for some of the most difficult times in their lives; then we guide them when those times come.
Make an appointment to meet with CunninghamLegal for California Estate Planning and Trust Administration. We have offices throughout California, and we offer in-person, phone, and Zoom appointments. Just call (866) 988-3956 or book an appointment online.
Check our Elder Care practice area page for more on many of these issues. Please also consider joining one of our free online Estate Planning Webinars.
We look forward to working with you!
Best, Jim
James L. Cunningham Jr., Esq.
Founder, CunninghamLegal
At CunninghamLegal, we guide savvy, caring families in the protection and transfer of multi-generational wealth.
