A power of attorney is a document in which you give someone else the power to act on your behalf for financial transactions. Texas, like many states, has adopted a statutory durable power of attorney form. The form has a laundry list of transactions from which you can pick and choose from, and you can add additional powers as you wish. The most significant issue to decide is whether to make the power effective immediately or become effective upon disability. The problem with making the power effective upon disability is that the powerholder will have to prove disability to the third party to whom the power is presented. Accordingly, I usually recommend that the power of attorney be effective immediately. Now there have been situations in my career, where husband and wife didn’t trust each other, and were insistent on making the power effective upon disability. They probably should have come to see a marriage counselor, instead of an estate planning lawyer.
In certain cases, such as where the the client has complicated assets, it is recommended that the client go beyond the statutory form and prepare a power of attorney that addresses specific transactions that might arise in the management of these complicated assets.
Powers of attorney are a simple but important piece of any adult’s personal planning. Usually used in the case of an illness or travel, they can be a lifesaver in more dire situations. I remember years ago a client came to me with the follow situation. Her husband had disappeared (his car was found abandoned on the way to work), but no body was found. Since he couldn’t be presumed dead under Texas law for four years, the wife couldn’t sell the family home. With the husband being the sole provider, she was forced to give up the home in foreclosure.