What is the law on....: June 2012

Wednesday, June 27, 2012

Conclusion on Powers of Attorney

Conclusion on Powers of Attorney

A durable power of attorney is an important part of your estate package. If prepared correctly, a durable power of attorney maintains your privacy and avoids the costly and lengthy process of a judge appointing a guardian or conservator for you. Thomas T. Tornow has 33 years of experience with durable powers of attorney. Contact his office at www.tornowlaw.com to schedule your free consultation if:

· You want to make a durable power of attorney so someone you trust can handle your affairs if you become incapacitated.

· You want your power of attorney reviewed to make sure it complies with your State's law and reflects your specific intentions for your financial and family situation.

· You want help deciding whether to give someone a power of attorney.

· You want to terminate your power of attorney.

· You have been asked to accept a power of attorney.

· You have questions about how to use your power of attorney.

· You have been asked to be an agent.

· You want help deciding who should be your agent.

· You want help deciding what powers to give your agent.

· You want to change your power of attorney.

·You want to change agents.

· You want to limit your agent’s authority.

· You have questions about your agent’s obligations.

· You are an agent with questions about your duties and obligations.

· You want help deciding what your agent should be paid.

· You are an agent and wonder what you can be paid.

· You have questions about your agent’s authority.

· You are an agent with questions about your authority.

· You or your agent are having problems using your power of attorney.

· You think your agent has breached his duties to you.

· You have questions about whether someone is incompetent or incapacitated.

· You have questions about the Durable Power of Attorney Act.

Thomas T. Tornow, P.C.

By: Thomas T. Tornow

This post is exclusively for informational purposes. It is not legal advice. Viewing this post, using information from it, or communicating through this blog does not create an attorney-client relationship. Thomas T. Tornow, P.C. is not liable for the use or interpretation of information on this blog and expressly disclaims all liability for any actions you may or may not take based on the content of this blog.

Friday, June 1, 2012

What if My Agent Breaches His or Her Duty to Me?

What if My Agent Breaches His or Her Duty to Me?

Your agent has special legal duties. These are called fiduciary duties. A fiduciary duty is the highest duty known in the law. Your agent owes these fiduciary duties to you. Your agent also owes these same duties to your guardian and conservator. Those duties are described in detail in a prior post to this blog entitled “What Are My Agent’s Obligations?”

If your agent violates his or her fiduciary duty to you, your first step is to terminate your agent’s authority under your power of attorney. This is usually done by informing your agent in writing that his or her authority is terminated. Terminating your agent’s authority is discussed in more detail in a prior post to this blog entitled “When Does My Agent’s Authority Stop?”

Your second step is to inform any person or business dealing with your agent that you have terminated your agent’s authority.

Your third step is to consult a lawyer about claims you may have against your agent and your obligations to persons or businesses your agent dealt with.

You are still bound by your agent’s actions even if (s)he violated his or her fiduciary duty to you. For example, if your agent breaches his or her fiduciary duty by signing a contract with a business, you are still bound by that contract. You have a claim against your agent, but your agent’s breach of duty is not a defense against someone who dealt with your agent in good faith. A person is not dealing with your agent in good faith if (s)he knew that your power of attorney was revoked, that your agent did not have authority to enter into the contract, or that entering into the contract was a breach of your agent's fiduciary duty to you.

If your agent knows, but does not tell you, that your co-agent has, or is about to, breach the co-agent’s fiduciary duty to you, then your agent is liable to you for all losses that could have been avoided if you had been informed. A successor agent is not liable for a former agent’s breach of duty unless the successor agent conceals or participates in the former agent’s breach.

Your agent is not liable to you solely because the value of your property or estate declines unless it is the result of a breach of your agent’s duties to you. Your agent is also not liable for breaching his or her duties to you if power of attorney specifically provides that (s)he is not liable for such a breach, unless:

· The provision is the result of your agent abusing his or her confidential or fiduciary relationship with you; or

· Your agent acted dishonestly, with an improper motive, or with reckless indifference to your best interest or the purpose of your power of attorney.

If your agent breaches his duty to you, (s)he is liable to you for the amount necessary to restore the value of your property or estate to the level it would have been had there no breach, plus your attorney's fees and costs.

Any interested person can ask a judge to review your agent’s actions. An interested person includes:

• You,

• A person asked to accept your power of attorney,

• Your spouse, parent, child, guardian, conservator, caregiver, fiduciary, descendent or presumptive heir,

• Your agent,

• A person authorized to make health care decisions for you,

• Someone who demonstrates sufficient interest in your welfare,

• A beneficiary of your estate or trust; and

• A government agency with authority to protect your welfare.

However, if you object, the judge cannot review your agent's actions unless your agent is asking for the review or the judge finds that your lack the capacity to revoke your power of attorney or your agent's authority. You probably lack the capacity to revoke your power of attorney or your agent's authority if you are impaired in your ability to manage your property or business affairs or to make or communicate decisions even with the use of technological assistance. The lack of capacity and its consequences are discussed in more detail in a prior post to this blog entitled “What If I Become Incompetent or Incapacitated?”

If the judge finds your agent breached his or her fiduciary duty to you, your agent can be held liable for the cost of repairing the breach and paying the interested person’s attorney’s fees and costs.

Thomas T. Tornow has 33 years of experience helping people whose agents have breached their duties and assisting agents accused of breaching their duties. Contact his office at www.tornowlaw.com to schedule your free consultation.

Thomas T. Tornow, P.C.

By: Thomas T. Tornow

What I Become Incompetent or Incapacitated?

What If I Become Incompetent or Incapacitated?

It is common for a power of attorney to provide that the agent's authority springs into effect only if the principal (the person giving the power of attorney) becomes incompetent or incapacitated.

You are incompetent or incapacitated if you:

A. Have an impairment in your ability to manage your property or business affairs;

B. Have an impairment in your ability to make or communicate decisions even with the use of technological assistance;

C. Are missing; or

D. Are outside the United States and unable to return.

Your springing power of attorney should name one or more persons (other than your agent) who are authorized to determine in writing whether the specific event has occurred. If the specific event is that you are incompetent or incapacitated, that person has the right to access your health and Social Security records and to communicate with your health care provider. If you do not name anyone, then your power of attorney becomes effective when a physician says in writing that A or B above exists or an attorney or judge says in writing that C or D above exists.

You can name in your power of attorney who you want to be your guardian or conservator if you become incompetent or incapacitated. That person can, but does not need to be, your agent. The judge is required to appoint the person you name in your power of attorney unless there is good reason to the contrary or the person you name is not legally qualified to be a guardian or conservator. Unless the judge limits, suspends or terminates your agent's authority, or your power of attorney provides otherwise, your power of attorney will remain in effect even after your guardian or conservator is appointed. Your agent owes the same duties to your guardian or conservator as your agent owns to you.

If you become incompetent or incapacitated without having given a power of attorney, it may be necessary to have a court appoint a guardian or conservator for you. A guardian takes care of your person. A conservator takes care of your financial affairs.

Having a court appoint a guardian or conservator is a lengthy and costly process that is usually paid for from your assets. It requires filing a case with a court and one or more hearings before a judge. The person who files the case, his or her attorney, your attorney and perhaps other witnesses are required to attend the hearing. The judge will often appoint a person to meet with you and may require doctors to examine you and report to the judge. The judge, rather than you, chooses the guardian or conservator and the scope of his or her authority. The judge usually requires your guardian or conservator to inventory your assets and make periodic reports to the judge. The hearings and reports are almost always open to the public and add to your loved ones' stress during an already difficult time.

All this can be avoided by a properly prepared durable power of attorney that names who you want as your guardian or conservator, should that be necessary, and what authority you want your guardian or conservator to have.

Thomas T. Tornow has 33 years of experience with guardians, conservators and powers of attorney. Contact his office at www.tornowlaw.com to schedule your free consultation.

Thomas T. Tornow, P.C.

By: Thomas T. Tornow

How Does My Agent Use My Power of Attorney?

How Does My Agent Use My Power of Attorney?

Your agent should keep the original of your power of attorney. You should keep a copy. Unless a statute requires an original, a photocopy or electronically transmitted copy of your power of attorney has the same legal effect as the original. Nevertheless, your agent may be asked to show the original. A business or person being asked to accept your agent’s authority may want to copy your power of attorney. Under the Uniform Power of Attorney Act, your agent can also give the business or person a written certification of the validity of your power of attorney and of his or her authority to act on your behalf.

Your agent has the authority to act for you in dealings with other persons or businesses. It is important that your power of attorney clearly identify what matters your agent can handle for you (this is called the agent’s scope of authority). Your agent has the power to bind you on matters with the scope of his or her authority just as if you did the act yourself. A business, person or entity acting in good faith can legally rely on your power of attorney unless they know that your agent is not authorized to act for you. For example, they may know that your power of attorney has been terminated or that your agent does not have the authority for the transaction.

It is very important that your agent discloses to the other person or business that (s)he is acting for you and not for him or herself. Otherwise, your agent may be personally liable to the person or business or entity. When your agent signs for you, (s)he agent should write or print your name, then sign his or her name and disclose that (s)he is signing as your agent. For example: “John Smith, by Sally Smith, his Agent” or "Sally Smith, signing as agent for John Smith and not individually."

If your power of attorney is properly prepared and notarized, someone doing business in a State that has adopted the Uniform Power of Attorney Act cannot require an additional or different power of attorney. The person, business or entity is legally required to accept and honor your power of attorney within 7 business days unless it:

(1) Would have no requirement to engage in the transaction with you directly;

(2) Knows your power of attorney has terminated or been revoked;

(3) Believes in good faith belief that your power of attorney is invalid;

(4) Believes your agent does not have the authority to perform the specific act or transaction;

(5) Believes engaging in the transaction with either you or your agent would violate Federal law; or

(6) Knows that someone has reported to the Department of Health and Human Services that your agent, or someone acting for or with your agent, may be physically or financially abusing, neglecting, exploiting or abandoning you.

The person, business or entity can also ask your agent to certify in writing that your power of attorney is valid and that (s)he has authority for the transaction. The business or entity can rely on that certification without further investigation and must accept your power of attorney within 5 business days after it receives the certification. If they do not, you or your agent can obtain a judge's order requiring them to accept your power of attorney and the person, business or entity is liable for your and/or your agent's attorney's fees and costs.

The person, business or entity can refuse to accept your notarized power of attorney unless you provide an English translation of your power of attorney or an opinion of a lawyer on any legal question about the power of attorney. The request for an attorney’s opinion must be in writing and give a reason for requesting the opinion. If the person, business or entity makes the request within 7 business days of receiving the power of attorney, you bear the expense of providing the translation or opinion. If the person, business or entity makes the request after 7 business days, they bear the expense. The person, business or entity can rely on the translation or opinion without further investigation and must accept your power of attorney within 5 business days of receiving the translation or opinion.

Thomas T. Tornow has 33 years of experience helping people with their powers of attorney. Contact his office at www.tornowlaw.com to schedule your free consultation.

Thomas T. Tornow, P.C.

By: Thomas T. Tornow

When Does My Agent's Authority Stop?

When Does My Agent's Authority Stop?

Your agent’s authority under your power of attorney stops when your power of attorney is terminated. Your power of attorney should specify when it or your agent’s authority is terminated. Even then, you can terminate your agent’s authority by revoking your power of attorney at any time for any or no reason. This is usually done by you writing your agent.

Your agent’s authority also stops if your agent resigns. Your agent can resign at any time for any or no reason. Unless your power of attorney requires a different way of resigning, this is done by your agent notifying you, preferably in writing, that (s)he has resigned. If you are incapacitated, the notice may be given to your conservator, guardian, co-agent or successor agent. If none of those exist, the notice may be given to your care giver or another person your agent believes has sufficient interest in your welfare or a government agency with authority to protect your welfare.

Your power of attorney and your agent’s authority automatically terminates when you die.

The former law in most States was that unless your power of attorney specifically provided otherwise, your power of attorney and your agent’s authority terminated if you became incapacitated. Under the Uniform Power of Attorney Act, it is just the opposite. Now, unless your power of attorney specifically provides otherwise, your agent’s authority does not terminate when you become incapacitated. If your power of attorney does not terminate when you become incapacitated, is called a durable power of attorney. It is important for you to give a durable power of attorney, and a durable health care power of attorney, to someone so that person can handle your affairs if you are no longer able to do so because of an accident, illness or disability.

If your power of attorney specifically provides that it terminates and your agent’s authority ends when you become incapacitated, the termination is not effective unless your agent, or the person dealing with your agent in good faith, has actual knowledge of your incapacity.

Your power of attorney can provide that it your agent’s authority stops when a specific event happens. For example, your power of attorney could provide that your agent’s authority ends when you return to the United States.

If your power of attorney is given for a specific purpose, unless it provides otherwise, your agent’s authority ends when that purpose is accomplished. For example, if you give a power of attorney to sell a specific car, your agent’s authority ends when the car is sold.

Your power of attorney also terminates if all your agents named in the power of attorney die, resign or become incapacitated. That is the reason your power of attorney should name one or more successor agents.

Unless your power of attorney provides otherwise, it terminates and your agent’s authority ends if you and your agent divorce, have your marriage annulled or legally separate.

Signing a power of attorney does not automatically terminate revoke your prior powers of attorney or end your other agent’s authority unless the new power of attorney provides that all or specific powers of attorney you have given are revoked.

Unless a judge limits, suspends or terminates your agent's authority, your power of attorney and your agent’s authority remain in effect even after the judge appoints a guardian or conservator for you. Your agent owes your guardian and conservator the same duties that your agent owes to you.

Your agent must immediately stop acting for you when (s)he learns that your power of attorney has been terminated.

It is important for you to let anyone dealing with your agent, like your bank, know that your agent has resigned, his or her authority has ended, or your power of attorney has been terminated. Otherwise, you remain bound by your agent's dealings with persons or entities that do not know that your agent has resigned, his or her authority has ended, or your power of attorney has been terminated.

Thomas T. Tornow has 33 years of experience helping people with their powers of attorney. Contact his office at www.tornowlaw.com to schedule your free consultation.

Thomas T. Tornow, P.C.

By: Thomas T. Tornow

When Does My Agent's Authority Start?

When Does My Agent's Authority Start?

Your power of attorney should specify when the authority you give your agent starts. If your power of attorney does not specify when your agent’s authority starts, then his/her authority starts when you sign your power of attorney. People often give their spouse or domestic partner a power of attorney that starts immediately.

Your power of attorney can provide that your agent’s authority starts on a specific date or when a specific event occurs. This is called a springing power of attorney. An example of a springing power of attorney is one that becomes effective only if you are incompetent to handle your own affairs. You are incompetent to handle your own affairs if you have:

A. An impairment in your ability to manage your property or business affairs;

B. An impairment in your ability to make or communicate decisions even with the use of technological assistance;

C. If you are missing; or

D. Outside the United States and unable to return.

Your springing power of attorney should name one or more persons (other than your agent) who are authorized to determine in writing whether the specific event has occurred. If the specific event is that you are incompetent, that person has the right to access your health and Social Security records and to communicate with your health care provider. If you do not name anyone, then your power of attorney becomes effective when a physician says in writing that A or B above exists or an attorney or judge says in writing that C or D above exists.

Thomas T. Tornow has 33 years of experience helping people with their powers of attorney. Contact his office at www.tornowlaw.com to schedule your free consultation.

Thomas T. Tornow, P.C.

By: Thomas T. Tornow