SeniorTruth

Question: My 80-yr. old mom asked me to take charge if she loses the ability to handle her personal affairs. To give me that kind of legal power, does she need to contact an attorney, or can she get pre-printed forms and do it herself?

Answer: Although most people are living longer lives, many are suffering from chronic illnesses or injuries that leave them unable to handle their personal affairs. A durable power of attorney for financial matters (DPAFM) is a legal document that allows people to choose who will speak for them should they become incapacitated. The person who signs the DPAFM is the “principal,” while the person chosen to act on the principal’s behalf is the “agent.”

A DPAFM must be very specific in defining the powers it is authorizing. For example, it may give the agent the legal right to manage, dispose of, sell and convey the principal’s real property or use it as security to borrow money. It may also give the agent the right to make decisions about where the principal will live, meals and transportation, household employees, and suitable recreation and entertainment.

In California, there are three ways to prepare a DPAFM:

• Pre-printed and software forms
• Statutory forms that include words required by state law, and
• Attorney-drafted DPAFMs.

Although some pre-printed and software forms are good, most are too general. As a result, they often fail to properly identify the principal’s property or define the agent’s specific powers. On the other hand, statutory forms include a basic template with a list of provisions that the principal either checks or crosses out. These forms also provide a space where the principal can add on special instructions that either limit or extend the agent’s powers. Again, it is the principal’s responsibility to make sure that the instructions are legally sufficient.

By California law, a pre-printed DPAFM form must contain a warning that should an agent improperly transfer property, he or she may be criminally charged with fraud and/or embezzlement, may be prosecuted for elder abuse, and may also be sued in civil court. Because it must include this warning, the form can be used as courtroom evidence that the agent understood his or her legal responsibilities before doing something with the principal’s property that turned out to be wrong.

Even though a do-it-yourself DPAFM is an acceptable legal document, issues may arise if someone questions its validity. A relative, friend, or even a government agent, has the legal right to file a petition with the court that questions whether the principal was clearheaded enough to understand the DPAFM when it was signed. Additionally, the court has the power to order a written report from the agent explaining all property transfers and agreements. This type of court intervention is much less likely to occur when the DPAFM was prepared by a licensed attorney.

Unlike a do-it-yourself form, an attorney-drafted DPAFM provides both the principal and agent with unique protections. Such forms must include confirmation that the principal obtained the attorney’s advice before deciding to sign the DPAFM. Therefore, should problems arise, the court’s primary focus will be on the attorney. In other words, compared to a do-it-yourself form, the legal security that comes along with an attorney-drafted DPAFM, which is certainly more expensive, may well be worth it.