Saturday, June 4, 2011

Some basics about Oregon powers of attorney

In this blog I try to stay away from law school stuff, but all the confusion about powers of attorney convinces me it is time to break down for you what these documents are and how they work. It will require some basic law school concepts. The first significant line in the Oregon statute governing powers of attorney refers to "agent" and "principal." Lawyers spend a lot of time in law school studying agents and principals. To understand powers of attorney, you need to understand what they are.

A principal is someone who hires (or appoints) another person to act on his or her behalf. An agent is the person who gets hired (or appointed). A client comes to my office and hires me to write him a will. The client is the principal. I am the agent. While writing the will I must work for the best interests of my client and write the best will I can. I owe my principal a duty of loyalty and best efforts. I cannot, while working for my client, do anything that would harm him.

Employees are agents of the companies they work for. FBI agents are agents of the government. Real estate agents, insurance agents, literary agents, and talent agents are just a few of the kinds of agents out there working for their principals. Every agent works for the good of a principal and owes the principal a duty of loyalty. Most agents get paid for the work they do.

A "power of attorney" is a legal document that has very little to do with power and nothing to do with attorneys. When you sign a power of attorney you are appointing an agent. You are the principal. The person you appoint in the power of attorney is your agent.

The run-of-the-mill power of attorney form you get from the stationary store appoints an agent to manage financial matters for you. You give your agent the power to engage in financial transactions for your benefit. The agent can normally write checks in your name, make purchases, buy and sell your property, and use your money to pay your obligations.

(A power of attorney that allows somebody to make health care decisions is called in Oregon an advanced directive. I will write about those in another place. This post is about financial powers of attorney.)

Appointing an agent to make financial decisions for you does not prevent you from making your own decisions. I have a power of attorney naming my wife as my agent. The power of attorney allows her to get into my accounts and use my money. That does not mean I cannot have a midlife crises and go out and buy myelf a red Corvette. It simply means that, if necessary, my wife can get to my funds and use them to help me. I signed it because I want her to be able to have access to my money if I am in a coma, if I am lost at sea, or if I have been kidnapped by evil doers.

The powers given to an agent are always limited. When you hire a doctor, you do not authorize him to sell your car. When you go to Walmart you know that the clerk at the cash register is an agent of the Walmart company, but you know that the clerk does not have the power to sell you the building in which he or she works. The powers given to your agent by a power of attorney are spelled out in the document. If the document does not describe the power, the agent does not have it.

In my opinion people spend too much time thinking about the title on the power of attorney form and not enough time reading it. The title doesn't matter; what the document says does. Nevertheless, I want to discuss some common titles.

General Power of Attorney

    This refers to a wide-ranging, common, financial power of attorney giving the agent the power to do any financial act which the principal could do. The title neither adds nor subtracts anything from the powers granted. The agent and people dealing with the agent must read the document to see what powers are included. This is the kind of power of attorney most commonly used as part of an estate plan.

Special or Limited Power of Attorney

    This is a power of attorney that authorizes the agent to do specific acts on behalf of the principal. Banks will give you a special power of attorney (on their form) that allows a friend or relative access to your checking account. A special power of attorney might allow an agent to sell the home of a person who has moved to another country. Special powers of attorney are not normally used in estate planning.

Durable Power of Attorney

    The word "durable" used in describing a power of attorney means that if the principal becomes incapacitated, the agent still has the powers contained in the document. Most people, including myself, execute powers of attorney because we want someone to take care of us when we are incapacitated. Signing a power of attorney that is not durable defeats the purpose. Powers of attorney are durable unless the document says it isn't. The document does not have to have the word "durable" in the title in order for it to be valid after the incapacity of the principal.

Springing Power of Attorney   

A springing power of attorney nominates an agent but only allows the agent to act if the principal is incapacitated. This breaks from the general rule that powers of attorney are effective the moment they are signed and cease to be effective upon the death of the principal. In order for the agent nominated in a springing power of attorney to act, the agent will have to possess proof of incapacity. That proof is sometimes tough to get and banks are very skittish about honoring springing powers of attorney. I have never had a client ask for one and have never recommended one. I believe that if you don't trust your selected agent while you have capacity to make decisions on your own, you probably shouldn't trust the agent to make decisions after you have lost capacity.

Most powers of attorney executed by elders facing possible disability appoint an agent and give the agent wide-ranging powers to control the finances of the elder. In the right hands the power of attorney is a powerful tools for protecting elders. In the wrong hands it is a weapon that can be used to steal your life savings.

If you are appointed the agent for someone who becomes incapacitated, there are some basic rules that you must follow. Failure to follow these rules can get you sued and, in worst case scenarios, get you arrested. The rules are as follows:

  1. The principal's money and property is not yours. You cannot use it to benefit yourself, your children or your dog.
  2. The principal's money must be used for the benefit of the principal.
  3. You must keep thorough records of transactions done with the principal's property.
  4. You cannot give away money or property belonging to the principal unless the gift is part of a well considered plan devised by your Oregon elder law lawyer.
  5. You cannot use the power of attorney to change the principal's estate plan or change beneficiary designations.
  6. A principal with capacity can revoke a power of attorney for any reason or no reason. Once revoked, the agent has no more power to act for the principal.
  7. When the principal dies, your ability to exercise the powers in the power of attorney ends.
    Conservators appointed by a court to handle the finances of a disabled elder must keep meticulous records and file annual accounts that balance to the penny. The court demands proof of, and explanations for, every expenditure. An agent appointed pursuant to a power of attorney does not report to the court. But if money disappears, the agent may be asked for the same kind of records that a conservator files. Any agent working for a disabled elder should be at all times ready to produce for public examination records of every transaction and explanations of how the transaction benefited the disabled elder.

    And finally, when the elder dies the agent's power dies too. Once the agent learns of the death of the principal, the agent must stop all activity on the elder's behalf and turn over all of the elder's money to the personal representative named in the elder's will.


    1. I have read your explanations about the Advance
      Directive and the Power of Attrny for Hlth Care. We are told that we need a POA for Hlth Care in addition to the Advance Directive in order to be able to help our mom who is 90 yrs. old. She is mentally OK but sometimes would like us to talk to the Pharmacy or call a doctor with a question. She doesn't hear well over the phone etc. Is this the case?

    2. I live in Oregon. I have been written out of the will due to taxes. I cleared it all up and mother then wanted to add me to the will again. Brother steared her away from it telling lies and scaring mother into submission. Mother believed that brother as her POA was the only person that could change her will. Due to a stroke in earlier years she did not understand a lot and trusted brother fully. So long story short as possible. Mother trusted that brother would give me the house and follow thru with the rest of the will. Mother told me this was to happen as well as other people. Now mother has passed and we are in our four month probate. Brother plans to sell the house. We also found out that brother earlier took a loan out on the house and put his name on it. We told this to mother before she passed and she was shocked. Anyhow the question is...nothing is in writing that she wanted me to have the house but we have witnesses for her wishes. Should we contest the will and get an attorney. Do we have the slightest chance. Please help!

      1. this is a family issue. if there are no documents that support your contention, the witnesses would have to be completely unbiased to have any weight. a court of law would likely not hear your pleas - perhaps arbitration or mediation with your brother could help.

        if, however, you can show that brother acted outside of his authority viv a vis real estate transactions, that would likely give you much leverage to work out a settlement.

        talk to an attorney. first thing, before taking any action.

    3. I need help. The Power of attorney for my grandma which is my aunt wont let me talk to my grandmother. IS THERE ANYTHING I CAN DO?

      1. a POA doesn't give an agent the authority to prohibit family communications. It can prohibit you from discussing certain business or financial issues with the principle IF you are a "3rd party" involved in the transaction, but ypur aunt cannot use a POA to legally prohibit you from talking to your gramma - unless gramma has explicitly told aunty that your communication is not welcome. This would be a family matter, not a POA matter.

        if you face such a situation, have a mutual friend ask gramma if she wishes to speak with you. but don't try to bypass the agent if your goal is to get gramma to give you money or such cases, the agent may order 3rd parties to deal only with the agent, if the POA grants such authority.

    4. Who needs to sign the poa in Oregon? I'm in another state and my brother was told I need to be present for the signing to be appointed poa for my mom.

      1. it has to be notarized...that requires you physically front of notary with current picture ID.

    5. Once the form is filled out,signed,and notarized, does it have to be filed with the county/state. Or does it go into affect right away?

    6. What special considerations or rights does an adult offspring/sibling have when a stroke has impacted the adult offspring/sibling's speech and language? This is a middle-aged woman, no spouse, with next-of-kin who live out of state and are unfamiliar with the principal's way of life, preferences, etc.

    7. I have a durable power of attorney for my mother who is nearing the "3rd stage" of dementia/alzheimers. I believed when we went and got the poa it was for financial as well as health, only to now find it deals mainly with financial. In one part it says: "Nomination of Guardian and Conservator" : "To the extent permitted by law, I nominate my agent to act as my guardian and conservator if I become incapacitated." Can this be a way I can help her with her health decisions. Everything says the court has to appoint me, hasn't she already appointed me herself in this sentence? The doctors cannot address her problems when she tells them she's "fine".

    8. My sibling and I have an Oregon durable power of attorney for a parent, who is now incapacitated. It has been in force for 8 years. It is worded jointly or independently. It does not, however, have a specific gifting clause. These last years, as we near the end, we have noticed that there are a lot more funds than is needed to pay the memory care facility and anything else. We would like to reduce or eliminate the potential estate tax before death, so it would be wise to gift equal amounts to family members for that purpose. And just enough gifting to lower below the million dollar mark, stop, and maintain it there.. Only family members are designated as beneficiaries in the Will. Is there a document that can be acknowledged by all those legal heirs from the Will which could permit gifting family members before the parent's death, and therefore save thousands of dollars?

      1. No, that would be fraud against the estate and the government for tax evasion.

      2. I would check with a tax attorney in your state.

    9. In 2017 does an Oregon Durable Power of Attorney need to be both notarized AND signed by two witnesses?

      1. it depends what actions the agent will be taking. consult an attorney.

        usually, a notary verification makes the witnesses unnecessary. but don't make assumptions in important matters.

    10. My mother has recently gone missing, at least I hope that's what has happened, she left me a last will...of sorts, it is written on notepad paper and has all of her pertinent information SSN, DOB, statements leaving me he last of her belongings (which are mostly in a storage unit in Portland) the will states that the storage unit is paid until a certain date and that there are very important items in there, the storage unit company themselves needs a POA to grant me total access to the unit, I have the key to the lock and the unit number, as well as the will, but I am not sure how to get a POA since she is not here to sign it, my question is where do I go from here?

      1. talk to an attorney about options. "gone missing" is not a good enough description of the situation. depending on the nature of her unavailability, a court can order the storage facility to release the property to you, usually not until the unit is no longer paid for. in this case, the facility would be giving the state, not you, the property, and the state in turn can give it to you if appropriate. but if mom is alive and the unit is paid for, it is still her property, and you have no rights to it.

        if she is truly missing, at some point a court will have to determine if she is presumed deceased, or if some other issue may be involved. if she is deceased with no will, inheritance will go to next of kin and other family, according to state law.