In general, you
can create a document called a power of attorney that allows another to act in
your name the same as if you were present.
That person to whom the power is granted is called the agent. The person
creating the power of attorney is called the principal.
The agent owes the principal a fiduciary duty to act in the best
interests of the principal. This duty is the highest duty imposed by law.
attorney can empower the agent to perform many acts. But, under Texas law an agent may not create a last will and
testament for the principal. There
are other limitations on the agent’s power.
But, unless limited by law or by the document creating the power of
attorney, the agent will often have great power. No power of attorney should be created in an agent you do not
trust. Often, an agent acting under
a power of attorney is called an “attorney in fact.”
The relationship between powers of attorney and guardianship law in Texas is
intertwined. In short, if there is
a general power of attorney that is durable, then a guardianship of the estate
of a person may not be necessary. In
fact, many courts in Texas will not allow the creation of a guardianship of an
estate of a person if a valid durable power of attorney exists.
A guardianship can be established on a person and on a person’s
estate/property. If the person, for
example, suffers from dementia such as Alzheimer’s disease one might need to
seek a court ordered guardianship to restrict the person’s ability to leave a
health care facility. Additionally, that same person might have an estate or bank
accounts that need to be managed. If
so, a court ordered guardianship may be necessary to sign documents and checks
among other matters. Guardianships
are expensive in relation to the cost of a valid durable power of attorney.
And, a properly drafted durable power of attorney can obviate the need
for a guardianship during the incapacity of a person.
Imagine that you
have been in a car wreck. You did
not create a durable power of attorney before the wreck. You are now mentally incapacitated. You cannot create a power of attorney now since you do not
have the legal mental capacity to create a power of attorney.
Your family will have to seek a court ordered guardianship to manage your
estate (which could be large if your injuries were wrongfully caused and a suit
recovers money from the wrongdoer) and the time consuming and expensive
procedure will begin – in court. Contrast
this to someone who created a durable general power of attorney before they
became incapacitated. The agent may
now manage the lawsuit that will be brought in the name of the injured and
incapacitated person and perform other acts without court intervention.
Time and money are saved.
If one has a
power of attorney, it might not be durable.
If so, it ceases to operate on the mental incapacity of the principal.
If the power of attorney is not a general power of attorney, it may not
allow certain acts to be performed by the agent even if it is a durable power of
attorney. If the power of attorney
is durable, it continues to be effective during the mental incapacity of the
attorney have many other uses. You
can empower someone, with a properly drafted power of attorney (usually limited,
durable and specific to the matter to be accomplished) to sell real estate for
you while you are out of the country, for example.
Texas allows the
creation of springing durable powers of attorney, whether limited or general in
nature. It “springs” to life
when the principal becomes incapacitated. If
it is not a springing power of attorney and is merely a durable power of
attorney, the agent is empowered upon delivery of the power of attorney to the
agent or upon some other event that conveys the principal’s intent to grant
the power to the agent. One
advantage of a springing power of attorney is that the agent has no power until
the principal becomes incapacitated. At
a minimum, this will eliminate the worry of granting immense power to an agent
before one becomes incapacitated. It
will also eliminate the worry of losing the power of attorney that may have been
created in 2002 and not given to the agent until the need arises let’s say in
2010. Remember that when the need
arises, i.e., incapacity, you won’t know where the power of attorney is
located in all probability since you will be incapacitated.
Finally, a power of attorney ceases to operate upon death. The agent’s power ceases upon death of the principal and could cease upon death of the agent if the agent is a person as opposed to an entity and if no successor agent is named in the power of attorney. In this regard, anyone dealing with an agent will want to know if the principal is alive. For this reason and others, a power of attorney is not a substitute for a valid will. A will begins to operate upon death; a power of attorney ceases to operate at death. One should have both documents.
This essay is not
intended to be legal advice to anyone. A
lawyer has to know the facts and all the facts before giving legal advice.
Even though some facts are stated in this essay, since there is no client
all the facts have not been gathered. Hence,
no legal advice can be taken from this essay.
The foregoing essay is a general academic discussion of some of the
aspects of powers of attorney relating to Texas law only using some hypothetical
facts. Texas law changes. And, sometimes it changes faster that this article will be
updated. Therefore, for this
additional reason, the following is not legal advice.
By: Leonard E. Cox, Attorney
at Law, State of Texas. www.LawyerCox.com