What is the difference in a durable POA, attorney in fact, and “contingent” as it related to a will?
Full Question:
Answer:
A power of attorney is an instrument containing an authorization for one to
act as the agent of the principal that terminates at some point in the future
either by its terms or by operation of law such as death of the principal or
agent. They are also called letters of attorney. The person appointed is
usually called an Attorney-in-Fact. A power of attorney which doesn't
provide for a successor attorney-in-fact to be appointed will terminate at
the death of the attorney-in-fact. The person making the power of attorney
appointment is called the principal. A power of attorney can be either
general, durable or limited. Some states have adopted a statutory power of
attorney. Other specific types of power of attorneys include: Health Care
Power of Attorney, Power of Attorney for Care and Custody of Children,
Power of Attorney for Real Estate matters and Power of Attorney for the
Sale of a Motor Vehicle. Power of attorney requirements vary by state, but
typically are signed by the principal and need to be witnessed and notarized.
State laws vary, but generally, a power of attorney must be complied with
unless the person to whom it is directed has reasonable cause to doubt the
authority of the agent. In some cases, a specific power of attorney
addressing the authority of the agent in a particular transaction may be
required.
Frequently Asked Questions
1) What is a General Power of Attorney?
A General Power of Attorney is a legal document which gives the person you
choose (the agent) the power to manage your assets and financial affairs
while you are alive. The document must be signed by you (the principal)
while you have the required legal capacity to give your agent clear and
concise instructions. The appointment may be for a fixed period and can be
revoked by you at any time providing you still have the legal capacity to do
so. A power of attorney ceases when you die. The executor named in your
will then takes over the responsibilities of your estate.
2) What is a Durable Power of Attorney?
A "durable" power of attorney stays valid even if you become unable to
handle your own affairs (incapacitated). If you don't specify that you want
your power of attorney to be durable, it will automatically end if you later
become incapacitated.
3) What is a Limited Power of Attorney?
A limited power of attorney allows the principal to give only specific powers
to the agent. The limited power of attorney is used to allow the agent to
handle specific matters when the principal is unavailable or unable to do so.
4) What is a Statutory Power of Attorney?
A statutory power of attorney is a power of attorney that copies the
language in a state statute which includes an example of a form that may be
used. For example, a durable power of attorney may also be a statutory
power of attorney if it copies the language in the state durable power of
attorney statute. State laws vary, but the states that have adopted a
statutory form of power of attorney typically allow for other language to be
used as long as it complies with the state law.
5) Why have a Power of Attorney?
When accidents, sudden illness, planned or unexpected absences occur, or
when you just can't cope, you may need someone to manage your financial
affairs. It can be done in anticipation of a future need, for a special purpose
or for a limited time. The person you appoint is called your agent. The agent
will (by your instructions) safeguard and manage your assets and financial
affairs if you are unable to manage them for yourself or if you lose legal
capacity.
6) Must a Power of Attorney be recorded?
Please refer to the state specific law summary to determine if a particular
Power of Attorney must be recorded. Usually, most Power of Attorney
forms do not need to be recorded. However, Power of Attorneys dealing
with the sale and purchase of real estate must be recorded.
7) Can a Power of Attorney be revoked?
A Power of Attorney can be revoked by the principal at any time, as long as
he or she is competent.
A power of attorney is independent of a will and the attorney-in-fact cannot
sign a will on behalf of the principal (the person granting the POA).
Contingent Beneficiaries in a Will
A "contingent beneficiary" is one who is to receive the bequest should a
stated contingency occur prior to the death of maker of the last will. Most
often, the contingent event is the death of the beneficiary prior to the death
of the maker of the last will. The following is an example of a bequest that
names a contingent beneficiary: "I hereby bequeath $10,000 to my brother
John and, should he predecease me, then this bequest shall go to his
children in equal shares." In this example, the children of John are known
as "contingent beneficiaries". When contingent beneficiaries are NOT named
in the last will, the bequest goes to the heir(s) of the original beneficiary.
Returning to our prior example, let us assume it reads: "I hereby bequeath
$10,000 to my brother John" without naming a contingent beneficiary. In
this case, should John predecease the maker of the last will, the heirs of
John receive the bequest. If John is survived by a spouse who was named
as the sole beneficiary in his last will, then she would receive the $10,000
bequest instead of John's children per the prior example where contingent
beneficiaries were named.
