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PAUL PREMACK, JD, CELA*
8031 Broadway
San Antonio, TX 78209
*Licensed in Texas
BENJAMIN PREMACK, JD** 
11900 NE 1st Street
Bellevue, WA  98005
**Licensed in Washington State & Colorado


San Antonio Probate, San Antonio Estate Planning, San Antonio Elder Law

 
 
Paul Premack, Express-News Banner

San Antonio Express-News
Copyright 2009, Paul Premack
May 26, 2009

Plain Statutory Durable Power of Attorney is Flawed

Dear Mr. Premack: My husband has recently been diagnosed with an illness that could, over time, cause confusion and disorientation. He’s been handling our finances, making decisions about investments and paying the bills. I usually listen, agree and sign on the spot he points to. But now he wants me to be ready to take over and is showing me how he’s handled things. He downloaded a "statutory power of attorney" form and wants to use it so I’ll be able to sign things for both of us if I have to. Have you seen this form? Should we use it, or is there something better? – V.F.

If the form he has located is based on Section 490 of the Texas Probate Code, then it is legally valid but flawed. It covers the basic requirements for delegation of authority from one person (the principal) to another (the agent). However, it has not been updated by the Texas legislature since 1997 and most of it based on a 1993 law that has not changed much even though the world has changed around it. The statutory form may fall short of providing what you really need, or may be overly broad for your circumstances.

I have made a copy of the statutory form, and annotated many of the clauses that may be wrong for you. View that copy right now in your browser (in PDF format) by visiting www.Premack.com/AnnotatedPOA.pdf. Here is a recap of some of its problems:

1. No explanation is given for a list of 13 specific powers granted in the form. It simply recites that they "are explained in the… Probate Code", and tells you to "obtain competent legal advice" if you have questions. The form uses only 114 words to described those 13 powers, yet those 13 powers take over 4800 words to explain in the statute. With the form, you only see the tip of the iceberg, and may not understand what you are signing. For instance:

The words "insurance and annuity transactions" include authority for your agent to change the beneficiaries on your life insurance policies. The words "banking transactions" allow your agent to close or modify accounts, including changing to whom the accounts may be paid upon your death. These powers may or may not be appropriate for your circumstances; the point is that using the form gives you no idea that you’ve granted that authority.

2. There have been court decisions interpreting and limiting the statutory form. For instance, the provision granting authority to handle "trust" transactions has been ruled to exclude power to create a trust for your benefit. You might want to grant that power anyway, since it gives your agent greater flexibility. The basic statutory form does not include it.

3. The "Personal and Family Maintenance" clause gives your agent power to pay for your children’s living expenses. That is fine while they are young, but what if you are 80 and they are 55? Worse, what if you have a deadbeat adult child you deplore, but for whom your agent has sympathy? The statutory form allows your agent to provide "normal domestic help, usual vacations and travel expenses, and funds for shelter, clothing, food, appropriate education, and other current living costs" for that adult child. You might want to limit that authority.

4. The statutory form allows your agent to make gifts from your assets, but does not specify whether the agent may or may not make gifts to him/herself. If you grant any gifting authority, the issue of self-dealing by the agent should not be left hanging.

5. The statutory form allows your agent to pay your bills, but does not give access to your medical records when paying your medical bills. Federal law restricts access to your medical records without your consent, which should be given in the statutory form but is not.

Overall, the statutory form should be avoided. You should never download any blank legal form from the internet in the blind hope that the form will properly serve your future legal needs. These laws are complex, and you should work with an attorney licensed in Texas whose practice focuses on your area of need. If you must use the internet, be sure you only use an online law office run by a licensed Texas attorney.

Prior Column: Q&A on Living Trusts, Part 2
Next Column: Power of Attorney must be Durable to Help

Disclaimer: This column answers a specific legal question asked by an individual in Texas. The answer may or may not match your individual situation. Be careful not to treat this column as specific legal advice, as it may not meet your individual needs. It may give you a solid basis for discussion with your own attorney.  You should consult with your personal attorney before you take any action on this or any legal issue. Also, please be aware that laws change, so  this column is valid only as of the date it was published. This communication does not create an attorney-client relationship between the author and the reader.

 

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