The Top 10 Attributes Great DPOA’s Consider Regardless of The Drafting State

by Lauren Barkan, Esq.

In evaluating Durable Power of Attorney Documents (DPOA’s) from various states, the best ones provide the client’s designated attorney-in-fact with clear authority, regardless of their home state.

Whether the drafter is in Florida, New York, Texas, or a community property state such as California, the best DPOA’s protect the client, and their attorney with unequivocal clarity and attention to detail. Exceptional DPOA’s have a lot in common, ultimately providing their attorney-in-fact with a solid legal foundation and a clear roadmap.

1. UNAPOLOGETICALLY STATE SPECIFIC

The best DPOA’s are unapologetically state specific and cite state code. The drafter’s emphasis is on individual state statute and drafters cite the source for the clear delegation of power and which powers are permissibly delegated in their state. It is key to cite state law on each power granted and ensure that to cite state code. Although this may appear like minutia, this thorough sourcing is the root of granting specific powers and the best DPOA’s are exacting and hold up to scrutiny here.

2. READILY EXPLAINABLE:

Great DPOA’s are readily explainable to the client and make it easy for the client to explain powers granted to their designated agent-in-fact. There should be no quick “brush over” from the attorney to the client at signing. It is essential to clearly explain what the client is executing. Regarding special statutory powers that often warrant the client’s initials, this clear explanation is even more essential to the client, and to avoid challenge.

The attorney’s objective is for the client to complete document execution with a clear understanding of what they’ve executed. This should be the attorney’s primary goal because their client will be required to explain to their designated agent-in-fact their precise powers granted. If the attorney can explain it to the agent clearly and succinctly, then the client can more readily explain it to their agent-in-fact.

3. CLEARLY REVOKE ANY PRIOR POWERS GRANTED WITH ANY EXCEPTIONS

Great DPOA’s thwart off any future litigation and confusion over DPOA validity by clearly revoking previous powers. These strong DPOA’s show the intent to revoke prior documents, and this intent is furthered with carve outs. There may be exceptions for instance with regards to powers granted the client directly, prior to or simultaneous with current estate planning, or separate bank or financial DPOA’s.

4. PROTOCOL AND ORDER OF PROCEDURE:

Great DPOA’s document a clear protocol. There should be no doubt of the order of procedure in the event the attorney-in-fact is required to use powers granted in the document. Great DPOA’s readily name a successor attorney-in-fact and their relation to the client, but the best DPOA’s take it a step beyond.

5. ACCOUNTING FOR EMERGENCY SCENARIOS:

The best DPOA’s provide for emergencies: Great attorneys account for the unforeseen and explain potential extenuating circumstances to their client when estate planning. For example, the attorney will note whether is the client’s attorney-in-fact local or out of state?

A common hypothetical posed to the client considers what might transpire if a local appointee is out of town in case of a medical emergency, when a client needs them the most? The best DPOA’s account for these scenarios and provide alternatives. One suggestion is to appoint the first to arrive on scene in case of an emergency as a contingency appointment until the first attorney-in-fact arrives.

6. MEATY ON MEDICAL:

The best DPOA’s are meaty on medical even if the client has separate healthcare documents. The most thorough and robust DPOA’s include healthcare provisions even though the client may have separate healthcare documents such as a healthcare advanced directive, or a healthcare power of appointment.

Excellent attorneys ensure that the DPOA, if taken alone, is effective for healthcare purposes. Thus, across states, we saw a best practice trend which included separate HIPAA authority to be initialed by the client.

7. ALL GIFTS ACCOUNTED FOR:

A top-notch attorney will go beyond blanket gifting provisions. Rather, estate planning experts dig deep in reviewing and drafting gifting provisions and include specific provisions to be signed off by the client. Although powers differ by state there was a trend to have the client consider the gifting of real or personal property, gifts to the attorney-in-fact themselves, including their estate or creditors, and in some states such as Florida there is a specific authorization to permit an estate spend down to enable the client to be eligible for Medicaid.

Other specific gifts included those to beneficiaries, which included medical expenses or potential gifts to further education, such a prepaid tuition programs.

8. TRUST POWERS ARE NOT IGNORED

Even if the client elects not to grant their attorney-in-fact the ability to create a trust, or to revise any estate planning previously executed by the client, great estate plans clearly lay out other scenarios where trusts may come into play.

For example, a strong DPOA will give the client the option to determine whether their attorney-in-fact can accept a distribution where the client had an interest, or whether the attorney-in-fact can add trust property to a previously created trust. These options should be available to the client regardless of whether the attorney-in-fact has the ability to create, modify, or terminate an already existing trust.

9. ADDRESS RETIREMENT ACCOUNTS IN THE HOME STATE AND OTHER STATES

Regardless of where a retirement account is held, great DPOA’s permit the client’s Attorney-In-Fact the authority to represent the client. Look for language that goes beyond, to include ERISA, qualified plans, and Individual Retirement Accounts (IRA’s). These provisions, including a waiver if the client’s spouse is a participant, can be essential. In reviewing DPOA’s across states, it is clear that often an attorney-in-fact will be called on to effectuate payment from retirement plans and great DPOA’s grant the attorney-in-fact with clear authority here.

10. LENGTHILY IF CLEAR!

Great DPOA’s may be lengthily but they remain clear and manageable. The DPOA is one document where length is effective if necessary to cover all powers and protect against all scenarios. The key is to ensure that the document maintains the client’s day-to-day business and legal activities upon incapacity. When considering the many obligations a client may experience (everything from paying taxes to paying various memberships, to taking care of family, beneficiaries, to pets), this document can easily become lengthily.

The length is ok AS LONG AS powers are drafted in a manner that is readily explainable to the client. This is why great DPOA’s break down granted powers by subject area. Length alone may not be determinative of an effective DPOA, because it is the content that is most essential. Lengthily documents may be necessary to include all the powers being granted, or not granted as the case may be.