The internet is making many people the master of all trades. When we have a pain, we instinctively google what type of disease or medical condition could cause the pain. There are great numbers of people who are diagnosing—or more accurately, misdiagnosing—themselves every day.
When people have a legal issue, they search for a solution on the internet. With respect to my practice area, I’m sure a good number of people turn to the internet to draft their own legal documents—a Will, a power of attorney, or an advanced healthcare directive. The problem I see with this self-help technique is that the average person doesn’t understand the legal and, perhaps more importantly, practical issues that legal documents are meant to address.
When people come to see me and I begin asking them questions about how they want their documents drafted, quite often, their initial responses are something I advise against. For instance, if a client has three children and I ask the client who they want to name as their power of attorney agent, the client will frequently tell me that they want all of their children to be named as their power of attorney agent.
The law does allow for co-agents under a power of attorney, meaning that more than one person can serve as the principal’s—that’s the person making the power of attorney document–power of attorney agent at any given point in time; however, just because the law allows for co-agents doesn’t meant that naming co-agents is advisable. In my experience, it is advisable to name one agent at a time, then name one or two alternate agents who will serve in the event that the primary agent cannot serve.
The reason I advise against naming co-agents is that financial institutions often refuse to honor a power of attorney document that names co-agents. Banks want to know that the one person who they are dealing with is the person who has absolute authority to deal with the principal’s assets.
For instance, assume that Mrs. Smith names her sons Joe and Paul as her co-agents. Assume that Joe goes to the bank with the power of attorney and withdraws money from Mrs. Smith’s account. Assume further that the next day, Paul goes to the bank and discovers that Joe withdrew money from Mrs. Smith’s account. Paul becomes agitated and asks why the bank permitted Joe to withdraw money from his mom’s account without his consent.
The bank may have been within its rights to honor a request from Joe without Paul’s consent, but now the bank has to explain things to Paul and Paul might not accept what the bank says about the issue. Why would the bank want to put itself into this situation? It wouldn’t. So to avoid this situation, a bank might simply refuses to honor a power of attorney document that names co-agents. Yet naming co-agents is many people’s first instinct when drafting a power of attorney.
Sticking with powers of attorney, I always ask a client if they want their power of attorney to be effective immediately or only when they are unable to make decisions for themselves. If I’m not quick enough with offering my advice, most clients will say that they want the power of attorney to be effective only when they are disabled, which is called a springing power of attorney document.
That seems correct from a common sense standpoint, but I think it is ill-advised. If you make the power of attorney document effective only when you are disabled, then a bank, once again, might give your power of attorney agent a hard time when it comes to using the power of attorney. The bank is certainly going to send the document to their legal team and it might make you get continual proof that the principal (Mrs. Smith) suffers from a disability in order to allow the agent to use the document.
When it comes to drafting estate planning documents, it is best to know the law and to know the practical issues the documents are meant to address, which can only come with years of experience.