3: Defining the Agent's Authority
"General" v. "Limited" power of attorney. A "general" power of attorney gives the agent (also called "attorney-in-fact") broad powers to perform most legal acts regarding the principal's financial matters with no stated limitations. Despite the lack of stated limitations, most state statutes require that certain powers must be directed recited in the POA form in order for the agent to possess. The most common types of acts that require mention in the POA itself are (a) the power to execute, amend or revoke any trust agreement of the principal and (b) the power to make gifts (especially gifts to the agent). The following is the applicable California Statute on the subject:
California Probate Code, Section 4264. A power of attorney may not be construed to grant authority
to an attorney-in-fact to perform any of the following acts unless
expressly authorized in the power of attorney:
(a) Create, modify, or revoke a trust.
(b) Fund with the principal's property a trust not created by the
principal or a person authorized to create a trust on behalf of the
principal.
(c) Make or revoke a gift of the principal's property in trust or
otherwise.
(d) Exercise the right to make a disclaimer on behalf of the
principal. This subdivision does not limit the attorney-in-fact's
authority to disclaim a detrimental transfer to the principal with
the approval of the court.
(e) Create or change survivorship interests in the principal's
property or in property in which the principal may have an interest.
(f) Designate or change the designation of beneficiaries to
receive any property, benefit, or contract right on the principal's
death.
(g) Make a loan to the attorney-in-fact.
A "limited" POA is one where the agent is only authorized to do a specific act (i.e., close the sale of my home in Naples, Florida) or one that first grants broad general powers and then removes certain areas from the agent's authority (i.e., agent has authority to invest, manage and control all my investment accounts of any kind; however, agent shall not have the authority buy or sell option contracts nor margin my investment accounts).
"Springing" POA. A "springing" POA is one that is not effective immediately upon execution by the principal but, rather, comes to life at a later upon the happening of some contingent event. The event that usually triggers the effectiveness of the POA is the "incapacitation" of the principal. The corollary of a "springing" POA is one that has a limited duration, i.e., one that contains a time-limit within its language. For example, the POA may say that the Agent has the enumerated powers over the principal's finances from the date of execution until January 1, 2005. Note: The MedLawPlus.com® financial power of attorney does NOT contain a springing feature. The MedLawPlus.com® form is effective immediately upon execution.
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4: Termination of POA
When does the authority of the agent cease under a durable POA? The following is the State of Missouri's version of the statute on this point that was adapted from the Uniform Power of Attorney Act:
As between the principal and attorney in fact [i.e., Agent] ..., the authority granted in a power of attorney shall be modified or terminated as follows:
(1) On the date shown in the power of attorney ... [for termination of the POA, if any];
(2) When the principal, orally or in writing, ... informs the attorney in fact or successor that the power of attorney is modified or terminated ...;
(3) When a written notice of modification or termination of the power of attorney is filed by the principal or the principal's legal representative for record in the office of the recorder of deeds in the city or county of the principal's residence ... ;
(4) On the death of the principal ...;
(5) When the attorney in fact under a durable power of attorney is not qualified to act for the principal [i.e., when the Agent has become incompetent and there is no successor Agent named in the POA];
(6) On the filing of any action for divorce or dissolution of the marriage of the principal and the principal's attorney in fact who were married to each other at or subsequent to the time the power of attorney was created, unless the power of attorney provides otherwise.
Missouri Revised Statutes, Section 404.717. 1.
The sixth situation of termination is of note (and this provision is not found in all states although many do have it). What it states is that should the Agent be the spouse of the principal at the time of execution and the couple later divorces, the Agent's power terminates unless the POA specifically states that it remains effective despite divorce.
If the principal is terminating the POA through notice to the Agent, it is recommended that the notice be in writing and served upon the Agent by registered U.S. Mail with return receipt requested. The green card one receives as a receipt from the post office after the delivery of registered mail is universally accepted by the courts as evidence of delivery. Also, if you are terminating the Agent's power, it is also recommended that you file a notice of termination with the county recorder of deeds for the county in which you the principal reside and any county in which you possess significant real estate holdings.
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