The WAY to WOW Shows
Durable Powers of Attorney
April 22, 2024
Automatically generated from YouTube captions; names and wording may contain errors.

[0:00] hello and welcome to trust and Estates weekly I'm your host Kevin bemel and we're here every Monday morning at 10: a.m. Pacific time making it 1 pm on the east coast and for those of you who are regular viewers of the show um you're you're saying wait what happened I thought this was over last year unfortunately my vision condition has uh has come back and so uh hence the sort of unusual thing here so um I'm sorry to say that um my guest uh Paul um dely um

[0:36] wasn't able to make it today um so I'm going to be uh pinch hitting as we say and um uh we hopefully we'll get uh Paul um rescheduled so um in light of uh what we talked about um last week regarding um uh uh dealing with a decedent social media so um if you watch that show you noted that um after that one of the um social media platforms I believe it was

[1:12] Facebook indicated that once a a um person has died um someone who has a power of attorney for that person can contact Facebook to deal with their um to deal with that person's social media and I I made a you know kind of an offhand um remark that uh actually legally that that that is a problem so I thought I'd talk a little bit today um about Powers of Attorney um I've

[1:47] addressed them um you know at different times um partially you know on on various episodes um but but in light of I you would think that a a huge company like Facebook would know that um one of the key issues in creating a power of attorney is well let me take a step back in a power of attorney there are two parties there's the principal which is the appoint is which is the person appointing in other words giving

[2:22] authority to someone else and then there's the person receiving that Authority who's called an attorney in fact now you may have heard the term attorney at law probably have otherwise known as a lawyer right so a lawyer is a par particular type of attorney and it's an attorney who um represents people with respect to um pursuing legal matters but there is something called an attorney in fact where the person in

[2:57] essence acts as our agent they act in our place okay which generally speaking an attorney at law does not do okay so the power of attorney document with the power of attorney document the principal appoints an attorney in fact to act in his place okay that attorney in fact is sometimes called an agent now when the principal dies that's it that cancels the any Authority any power that the attorney in

[3:33] fact has it's it's done okay so the idea that somebody with an with a power of attorney could make decisions for someone who's deceased is basically a non-starter because that person no longer has any power so um at at at the point where um the person has died um now this uh decisions will be made by an executive if they have a will or a successor trustee if if they had a trust and they were the trustee under the

[4:08] trust or some sort of personal representative that would probably be appointed by the court for example a courta appointed administrator okay that person now has legal authority to act on behalf of the estate of the person who's died um not really on behalf of the person himself because of course he's he no is no longer there now there are different types of Powers of Attorney um and in when doing estate planning one of

[4:45] the most common is for someone to create what's called a durable power of attorney okay so a regular power of attorney not only is cancelled when the principle dies but typically if the principle is incapacitated in some way that may also prevent the attorney in fact from acting on the person's behalf okay it depends on how that particular power of attorney document was written under a durable power of attorney if the

[5:22] person becomes incapacitated that essentially triggers the appointment of the attorney in fact to make decisions on that person's behalf because they are incapacitated okay so let's take a situation where um someone has um as part of their estate plan created a durable power of attorney um and and let's say they appointed their you know their friend Joe um with whom they share with whom he

[5:58] shares you know very similar values and Joe is a close friend so Joe knows him well okay and and Joe is also knowledgeable about business matters which it would be a a good thing for someone who's holding a durable power of attorney okay and uh the principal will will call him um um Bob okay so you know Bob gets into an automobile accident and um is rendered um unconscious and um the doctors uh

[6:34] attending to Bob conclude that it's it's unlikely that um Bob is um in the short term um going to come out of the coma that he's in okay so now Bob is incapacitated he's not going to die um he could be you know breathing on his own so he doesn't necessarily need life support um but he you know has no ability to handle his own affair so being incapacitated that would now trigger um uh Joe's Authority Under the durable power of attorney okay and so

[7:11] now uh Joe basic basically has the authority to handle Bob's business Affairs okay now these documents have to be written very very carefully it's not something to you know go online and look for for you know template durable power of attorney and fill it out okay and and the reason is because in order for financial institutions to honor them okay they need typically need to be in a particular form okay and so um a bank

[7:49] you know you can't most banks if if I were if I were you know if I if I was made a attorney in fact let's say I was made the attorney in fact for uh uh for for Joe okay and I walked into his bank with my power of attorney document there's a good chance the bank will say we're not going to honor this if it because if it's not in the format that the bank wants you know they're they're not going to do it they're going to be concerned uh you know am I was I you know genuinely appointed as um the attorney in fact do I have authorization to do

[8:26] the specific things like takeover trans acting in bank accounts those sorts of issues and so they're going to be very very sensitive to that okay now a durable power of attorney can be written broadly or narly okay and and that depends on what the principal wants so you know the principal May write a durable power of attorney that only allows for you know um B personal business matters related to you know

[9:02] keeping him alive and and helping him recover and get back to um having capacity for example or it can be written broadly where the person has authority to basically take over all of the financial decision making um that the uh the principal would have made were did if he had capacity himself okay now the broader The Authority the more care ful the durable power of attorney needs to be written and in fact um if if um I forgot the names if

[9:40] Joe um you know has has um Accounts at particular financial institutions it's probably a good idea to consult with those financial institutions to make sure that whatever document is drawn up will be accepted by those financial institutions maybe it's a bank maybe it's it's a a brokerage company um maybe it's uh you know an automobile lender who knows um all of those um you know various Financial um Services firms um may need to be consulted to make sure

[10:17] that your attorney in fact can in can indeed operate and make decisions on your behalf now if the power of attorney or the durable power of attorney is going to allow the person to to take over operation of a business that that you own okay so that may be easier because ass let's say you're the sole owner of the business so um you know you can basically do whatever you want having said that you you would be well advised to socialize that decision um with the um people working at the

[10:54] business especially if you're going to be bringing in an outsider think about that you've got people who've been working for you maybe for a long time and now you know you're you're incapacitated and they may resent somebody coming in um and and and taking over thinking you know gee you know we've been working for you know for Joe for all these years how come you know one of us wasn't selected to take over the business now there may be a good reason for that okay maybe the business is a real estate business and you're the designated broker offic sir and and um

[11:31] you don't have anyone on your staff who can fill that role because nobody has a broker's license so you may have to bring in someone from the outside to act as the designated uh broker officer and that person you know may need to do so under a durable power of attorney okay now by the way um nothing prevents you from having more than one attorney in fact for different aspects of your financial life so you may give a durable power of attorney to one individual to operate your business and you may give a durable

[12:07] power of attorney to another individual to handle your personal finances okay now that may be that may be making you know your business Affairs more complicated on the other hand that could also create sort of a checkin balance um to make sure that um you know people were handling things correctly um no matter what anyone who carries a power of attorney in fact durable or not has a fiduciary duty to you um and so whatever they do must be for your own for for

[12:45] your benefit not primarily but solely for your benefit okay and um you know they may be they may be acting um uncompensated or they may be acting for compensation that should be specified as well okay and and the way that's set up keep in mind can have an impact on how um how much Temptation there is right for them to act in shall we say a non-fiduciary way okay so um that's another issue to consider when choosing

[13:21] someone to hold a durable a power of attorney um you know to to handle your your business Affairs if you're incapacitated ated now just like any power of attorney okay um if you become incapacitated and then die that durable power of attorney's Authority ceases upon your death now if you want continuity you may decide that you're going to have the person you appoint as attorney in fact under your durable power of attorney to also be your

[13:57] personal representative your successor trustee or your executive or whatever okay and that's perfectly fine to do that it may make sense to do that okay but keep in mind that you're giving them in essence two separate categories of authority one is for while you're capacitated but alive and the other is for when you're deceased okay and otherwise once as I said in beginning once the principal dies that cancels the

[14:33] power or the Authority Under The Power of Attorney okay and now the the personal representative takes over okay so if continuity in your Affairs is important so then that's something to consider when you're you know choosing a personal representative for your estate and and by the way if you own a business that business becomes part of your estate so um in in the absence of some other um plan under the estate plan um if you um are running a business and you pass away and you let's say you have a

[15:09] successor trustee um let's say the bit you know all of your um all of your property um including your business is now owned by your your living trust okay and then you die so and and there's a successor trustee appointed to administrate the trust after your death Okay so so what happens in terms of the management and the running of that business is now going to be up to your successor trustee so that person may end up running the business or that person may bring someone else on board to run

[15:44] it um you know on behalf of the estate it you know it really depends um how complicated the business is um etc etc how how complex the estate is I mean if it's a huge estate um that takes a lot of time and work to administrate it may not be feasible for that person to run the business as well and especially if the business is some sort of specialty well you know the the uh successor trustee may not have uh that specialized knowledge to run the business and so then someone will need to be brought in to do that okay now again if that is

[16:20] likely to be the case that's probably something that you want to address um in your estate plan so you may um you know you may wish in fact um should have some sort of succession plan or continuity plan for your business it can be virtually disastrous to um not have a succession and continuity plan for your business um minimally it's going to cause your your uh colleagues a lot of stress okay as

[16:56] they try to figure out what's going to happen m maximally it could cause the business to fall apart and now a valuable asset has been dissipated or lost because there was no succession plan in place okay so how you handle that that's you know for you to decide in discussion with your advisors your estate planning lawyer your accountant maybe you have a business advisor um it's it's worth Consulting with all of those and making sure that all of this is done in a way that will most likely

[17:31] conform to your wishes after you pass away okay so I've been talking about a a durable power of attorney that um allows someone to make financial decisions for you um should you become incapacitated now um there's another type of durable power of attorney um sometimes called a durable power of attorney for health care or a healthcare uh directive that goes under several different names healthc care power of attorney now this is a power of this is a power of

[18:07] attorney specifically appoint that specifically appoints someone an attorney in fact to make Health Care decisions for you should you become incapacitated and now you're no longer able to make those decisions for yourself so rather than um having a situation where now um decisions about your health care are are thrown on to family members or other loved ones and the medical people taking care of you without any direction on your part okay

[18:43] if you create a durable power of attorney for health care now you have someone specifically appointed to to make those decisions okay in a manner typically that you will specify in the durable power uh power of attorney for health care so for example you may have certain religious requirements um related to your health care so um Christian Scientists for example have certain have certain restrictions on the type of Health Care Services they can receive so someone uh appointed as the

[19:22] attorney in fact under a durable power of attorney for health care of a Christian Scientist should be knowledge ible about those and should also be committed to excuse me committed to upholding those beliefs on behalf of the principal okay and and I I just bring that up um because I remember as as a Boy Scout a very young man we had um a couple of Scouts in our troop who were Christian scientists and and we were taught you know what we could and couldn't do um if they got hurt for example while we were on a you know camp

[19:58] trip or a backpacking trip whatever okay and and you know a lot of it came down to one brother was going to take care of the other and and you know we shouldn't do anything directly only at um the uh request of of one of the brothers to make sure that we didn't do anything um you know that violated their religious tenants again it was interesting experience for a young man um yeah I was 11 12 years old I think at the time or something like that and it was you know and look I you know um as children we

[20:33] don't necessarily have a lot of exposure with um other sets of religious beliefs but it was a great lesson um and I think you know my Scout Masters um were um um grateful would be the wrong word but I think they they they it was they thought it was a good thing for um for all of us kind of be mixed together and to be learning about each other's beliefs systems um that was a very you know powerful message in in in line with with scouting um so so whoever you appoint as the principal in fact under a durable

[21:08] power of attorney again they should understand what your wishes are now that doesn't mean they they cannot or should not consult with your family and and health care providers um they they probably should but um in the end okay there job is to fulfill their fiduciary duty to you and so whatever decisions they make need to be made in accordance with your wishes okay and so to the extent that your uh your family members

[21:45] Andor your health care providers are urging or recommending a decision that would be counter to your wishes okay your attorney in fact under a durable power of attorney for Health Care should reject those recommendations in favor of pursuing what what you know you want so you know for example um let's say that you want to be um kept alive um as long as possible that you you you know you don't want to have um life support

[22:20] withdrawn okay um your you know family members may be saying well you know Joe is he's the doctors are saying Joe is never going to recover he's going to live uh you know as a vegetable for the rest of his life um and and that's no way for a human being to live and and by the way that's a tremendous drain on resources etc etc the healthcare professionals are saying we should withdraw um uh you know um um life sustaining um means and and let

[22:56] you know Joe sort of die of you know normal death um but Joe may have told his attorney in fact that no I want to be kept alive as long as possible I don't want um life sustaining care to be withdrawn ever okay and so if that's what Joe wants then the fiduciary obligation of that attorney in fact is to comply with with Joe's wishes okay and and and this is this is really an object lesson um across the whole realm of estate planning when it comes to

[23:32] fiduciary duty as a fiduciary um and I'm in my case I'm a professional fiduciary because it's a licensed role that I hold my job is always to do my best to understand what is it that my clients want Andor wanted if they happen to be deceased now and to do my best to bring that about on their behalf even if I encounter some resistance on others from others who want certain things to be done a

[24:07] different way okay that does not relieve me of my fiduciary obligation um and um now in some cases um my fiduciary obligation may be to beneficiaries okay and and and if there's more than one sometimes beneficiaries can um uh be in dispute about what they think is you know for you know everyone's best interest or whatever um and so then my job is to mediate um those disputes and if I can't do that successful bring those disputes

[24:44] into a forum where they can be successfully worked out and done so in a legal fashion so for example if I'm administrating a trust and and I've got two beneficiaries of that trust who are disp uting um what ought to be done okay and and and the dispute is getting rather heated I'm well advised to seek the Court's assistance even though it's a trust and the court doesn't have jurisdiction I can file an action when there's a dispute to get the Court's blessings so to speak on how I resolve a

[25:21] particular dispute and in that case um it's better to ask permission than to ask forgiveness I'm sure you you all have heard that you that old saw that you know many times it's better to ask forgiveness than permission that's typically not the case um when you're dealing in the fiduciary realm so um sort of a pinch hit like I said for uh my guests who couldn't make it today um um but uh you know a good topic for us to to visit and and revisit from time to time so thank you very much for joining me I appreciate it we have some classic

[25:59] um episodes coming up the rest of this week because um the Jewish holiday of Passover starts this evening and so um I'll be uh enjoying the holiday for the next couple of days um and uh and and then that holiday picks up next week where we'll have some more classic episodes but I'll see you live again next week on Wednesday so as always deeply appreciate you um checking out my shows if you have any questions comments please take a moment to leave them in our social media do my best to respond in a timely fashion and um always if there's

[26:36] anything that I can do to help um you can feel free again to post something in social media if it's General if it's specific um either direct message me or uh send me an email all of that contact information will be in the show notes after this episode posts wishing you a wonderful rest of the day and for all of my um Jewish viewers a a very uh Happy um and freeing uh Passover and signing off as I always do to my dear friend Marie You Are My Belle all the best

[27:12] folks