09 March 2007 -  Jacksonville, Florida USA                                        

The Power Vested In Me

I had a chance to talk face to face with the estate lawyer when DH & I had our own estate plan done while at the same time I was doing an inclusive research on the very same topic assigned to me by my professor in financial planning last fall.

For this reason, I have been meaning to make a follow-up entry about my previous post to re-enforce and impart the very substance and importance of this notarized document as there are legal issues that we must know and address before things go off out of whack:

Durable Power of Attorney
The power of attorney is a legal document by which one person (called the grantor) appoints another person (called the attorney-in-fact) to make any personal and/or financial decisions and perform certain acts on behalf of the grantor.

This is a very powerful document that has the potential for being a very helpful if you have one in effect when the situation calls for it however this can also be very dangerous and can be abused for some selfish/evil reasons. 

Here are examples why we need to have this document in hand:

What was surprising to me at one point (this happened before I have this power vested in me by my DH ;-) when I called the bank to make a simple inquiry about the payment I made to my DH’s credit card; I was told by the rep that by law, she can’t discuss nor disclose any information to me about this case because I wasn’t in my husband’s credit card account even thought I am the legal wife and I knew his SSN, birthday and other personal information.

My ex-co-worker was in her 50’s at that time and her husband was 10 years younger than hers; they been married for about 6 years, she had 2 grown-up kids in previous marriage but over the years she put on a lot of weight while her husband stays hunky; lean and muscled that is. She used to tell me how her husband picked on her about her weight but she said she doesn’t give a damn. Next thing I know her husband had left her for another woman. To make the long story short, she was left alone to face their creditors and since she  can no longer afford to pay the bills altogether by herself; she couldn’t sell the house without her husband's signature either so she let the mortgage company foreclose the house for nothing.  She then filled a divorce but it was pending for a while because the husband flew out of the country. Bottom line is, had she’d gotten the durable power of attorney in hand before this sticky situation took place, there would have been no problem in selling the house even without her husband’s signature.

Another case is, say for instance your husband met an accident (God forbids) and became mentally and physically incapacitated for the time being thus he can’t do anything. You, as a wife, who has a durable power of attorney in hand can sign, execute, and or transact business legally in behalf of your husband.  You can sign any legal documents, process any insurance claims, benefits and or apply for a loan in his name without his signature. You can even sue someone in his behalf. Worse comes to worst, you can sell the house without his signature if it deemed necessary.  The durable power of attorney is the only legal document that gives you all the rights and power to make decision or do just about anything legal in behalf of your husband's name.

The danger on the other hand is, if for instance you gave a durable power of attorney to your spouse, and your spouse has been secretly  having a serious affair with another woman and is planning to screw you before the divorce; he can use the power of attorney to clean out your individual bank account and or apply for a loan/credit cards and racked up bills in your name.

Another wicked example is, the well-meaning older or aging parent gave a power of attorney to his son only to find out later that the son have squandered all her savings or sold her property behind her back.

Therefore, the most important thing to remember is that you (as a grantor) are going to be legally responsible for the acts of the person you give your durable power of attorney to. So you must exercise great care in picking the person you are going to trust your life with.

Bear in mind also that the Durable power of Attorney becomes null and void the moment the grantor dies. That means this document is only valid and binding while the person (grantor) is still alive. Once the grantor dies, that’s the end of it because the said document is no longer legally recognized. Accordingly, this is the time where the Will comes in very handy.

To sum up, the Durable power of Attorney is useful when the grantor is still alive while the Will takes effect after the grantor' last breath.

Next post, I’ll go over the main points between a Will, Living Will and Living Trust.