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Thursday, January 06, 2011

The Power of Attorney, Part 2: How It Works

My prior post explained what a Power of Attorney is and how it works.  But you need to know more about this powerful tool.  For instance, how do you create one?  And what powers does it grant to your agent?  Whom should you choose as your agent?

How do you create a power of attorney?

Under Minnesota law a valid POA must be:

  1. In writing
  2. Signed by you in front of a notary public
  3. Dated appropriately
  4. Clear on what powers are being granted.

By following the requirements above, you will create a limited power of attorney.  But you also have the ability to grant more or less power to your agent and control the duration and how the POA becomes effective by using a durable or springing POA.

Durable POA

A durable power of attorney remains in effect after you become incapacitated so that your agent may continue to act on your behalf.  In order to create a durable power of attorney, the document must include a statement such as: “This power of attorney shall not be affected by incapacity or incompetence of the principal.”   In other words, the POA must be clear that the powers granted to your agent continue upon incapacity.

Springing POA

Alternatively, you may create a springing power of attorney, which doesn’t take affect until after you become incapacitated.  This is a safe choice if you do not want to give your agent the immediate power to handle your matters but you want to be sure that you have someone to take care of things if you are incapacitated.  For instance, single parents may not have someone to whom they want to grant the immediate power to write checks or withdraw money but whom they do trust to handle these matters upon incapacitation.  To be a springing POA, the document must state that it is effective only in the event that you are incapacitated.

What powers can you grant to your agent?

In Minnesota there are two primary POA options: 1) the form created by statute, known as the ‘statutory short form power of attorney’; or 2) the common law power of attorney.  The difference between the two mainly comes down to the type and amount of power you want to give to your agent over your financial matters.

Minnesota Statutory Short Form POA

Under Minnesota’s statutory short form power of attorney you simply complete the form “as is” and check a box next to the specific power listed to allow your agent to handle any or all of your financial matters related to a limited list of financial matters.

You still have the power to restrict the duration, powers granted and way in which the POA becomes effective. And, of course, you do not need to check all the boxes.

But, Minnesota’s short form has its limits, especially for those who are unmarried and wish to be sure their needs are taken care of in the event of incapacity.  For instance, the short form does not give your agent the power to create, amend or terminate a trust.  For these expanded powers you need to have your attorney draft a common law POA.

Common Law POA

The term “common law power of attorney” merely refers to any POA that does not conform to the statutory short form.  In other words, there is the statutory short form and then there is everything else.  Due to the limited flexibility of the statutory short form, I always use a common law form, especially for my nontraditional families who are unable to rely on the law to protect their interests.  As explained in prior posts, persons who are unrelated by blood or marriage may find it impossible to obtain court approval to handle matters for their loved ones.

Keep in mind that being married does not give couples the automatic right to handle all of their spouse’s financial affairs.  If one of you is incapacitated, the other spouse will need a POA to access information related to your 401k or to sell jointly held real estate.  Whether married or not, be sure that if you become incapacitated, your matters will be handled by someone you trust – get a POA now.


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From within Hennepin County Unique Estate Law represents estate planning and elder law clients throughout Minnesota, including Minneapolis, Edina, Bloomington, St. Louis Park, Minnetonka, Plymouth, Wayzata, Maple Grove, St. Paul, and Brooklyn Park. The Minnesota law firm of Unique Estate Law focuses on all aspects of estate planning, including specialized wills, trusts, powers of attorney and medical directives for married couples, young families, blended families, single parents, gay families and those going through a divorce. Unique Estate Law also handles probate administration, asset protection, Medical Assistance planning, elder law, business succession planning, adoptions and cabin planning.



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