DURABLE POWER OF ATTORNEY FOR FINANCIAL MATTERS
© Copyright 2011 Lee A. Drizin, Chtd.
1. Warning Language. The new form contains a section entitled “Warning to Person Executing This Document” similar to the language which has always existed for Durable Powers of Attorney for Health Care Decisions. This section indicates, among other things, that the Document revokes prior Durable Powers of Attorney, may be revoked by you and may vest broad powers in your designee. This is new since the form previously prepared for you indicated that prior Durable Powers of Attorney were revoked only to the extent they were inconsistent with document prepared by our Firm. The most important difference is that the warning indicates the Durable Power of Attorney becomes effective IMMEDIATELY unless otherwise provided in the document. This is a significant revision as the Durable Powers of Attorney prepared by our Firm almost always provide that the document would not become effective UNTIL you become incapacitated.
2. Change in Terminology. The new forms have replaced the term “attorney in fact” with “agent.” They also contain a section for nomination of guardianship in the event it is not addressed in the Durable Power of Attorney for Health Care Decisions the document prepared by our office nominates a guardian as well). This creates a potential problem in the event you select different persons to serve as your Financial Agent and your Health Care Agent.
3. Grant of General Authority. Previously the laws pertaining to Durable Powers of Attorney did not provide any specific guidance to identify the types of powers to be included. As a result, your Durable Power of Attorney was modeled after the California Probate Code Section 4401 (Uniform Statutory Power of Attorney) which set forth very broad powers. The revised Nevada statute is identical to the California law and, therefore, the powers set forth in your document are virtually the same as provided for in the new form. However, the new document does not provide the detail of our forms in the description of these powers.
4. Grant of Specific Authority. The new Durable Power of Attorney for Financial Decisions contains a section with numerous questions specifically about authorizing the creation/amendment of trusts, gifts, changing beneficiary designations, exercising fiduciary powers and disclaiming interests. While the document previously prepared for you contains some of these powers, this section is now substantially broader and raises certain concerns about the potential for abuse.
5. Limitation on Agent’s Authority. The new document contains a specific limitation that an agent that is not a spouse MAY NOT use property to benefit the agent or a person to whom the agent owes an obligation of support unless you have included that authority in the Special Instructions. The problem is that this does not address the use of the Power of Attorney to benefit the agent’s relatives.
6. Third Party Protection. Perhaps the most significant change in the law relates to the ability of third parties (e.g., banks, financial institutions, etc.) to rely upon the validity of the Power of Attorney without incurring any liability by permitting the agent to exercise any power set forth in the document. As a result, it is expected that more institutions will permit agents to exercise rights on your behalf without the need to institute expensive guardianship proceedings.
7. Important Information for Agent. Finally, the new form provides information for the Agent regarding his/her duties, termination of the agent’ authority and liability of the agent.
The information presented herein is general information only and should not be considered legal advice nor should you rely solely upon this information in taking any actions regarding your matter. While no attorney-client relationship is formed by supplying this information, please do not hesitate to contact us at (702) 798-4955 to schedule a time to discuss your particular circumstances.