Understanding Durable Powers of Attorney Under the Massachusetts Uniform Probate Code

What is a Durable Power of Attorney?

A Durable Power of Attorney is a legal document that allows a competent individual, known as the principal, to designate another person, referred to as the attorney-in-fact, to manage their affairs. Unlike a standard power of attorney, which becomes invalid if the principal becomes incapacitated, a durable power of attorney remains effective even if the principal loses mental capacity. The durability of this document is crucial as it ensures that the appointed agent can continue managing the principal’s financial and legal matters despite any subsequent disability or incapacity.

Durable Power of Attorney

Agent’s Authority and Responsibilities

Once empowered through a DPOA, the agent can perform a wide range of tasks on behalf of the principal. These include signing checks, managing tax returns, entering into contracts, buying or selling property, and even running the principal’s business. Essentially, the agent has the authority to execute any action that the principal could perform if they were capable.

Who Can Execute a Power of Attorney?

In Massachusetts, any person who is over the age of eighteen and has the mental capacity to enter into a contract can create a power of attorney. This excludes individuals under guardianship or conservatorship, those adjudicated as mentally incompetent, or individuals under the influence of substances impairing their judgment. Notably, once a guardian or conservator is appointed, the ward is deemed incapable of executing a power of attorney, even if they have a lucid moment afterward.

The Limitations of Joint Ownership

Some people consider holding property jointly as an alternative to a DPOA. However, this is often a misconception. While joint bank accounts can facilitate easier transactions, joint tenants generally cannot refinance, sell, or transfer real estate without the consent of all joint tenants. If one joint tenant becomes incapacitated, it may become necessary to involve the Probate Court to appoint a guardian or conservator, which can be both time-consuming and costly. A durable power of attorney can effectively bypass these complications, saving both time and legal expenses.

Tailoring Your Durable Power of Attorney

When creating a DPOA, individuals have two main options: the present grant and the springing power. A present grant takes effect immediately upon execution, while a springing power activates only when the principal is declared incapacitated. Choosing between these options depends on the principal’s preferences and circumstances.

Interaction with Court-Appointed Guardians

If a court appoints a conservator or guardian, the agent under a DPOA must account to this fiduciary as well as to the principal. The appointed fiduciary holds superior authority, including the power to revoke or amend the DPOA. Nonetheless, principals can nominate their agents to become their conservators or guardians within the DPOA itself, and courts generally honor such nominations.

The Complexities of Gift-Making Authority

An unresolved issue with DPOAs is whether the attorney-in-fact can make gifts on behalf of the principal. Unless a DPOA explicitly grants this authority, the power to make gifts may not be implied. Given the potential tax implications and risks of abuse, it is advisable to explicitly state gift-making powers within the DPOA and consider safeguards, such as limiting the amount or appointing multiple attorneys-in-fact.

Challenges with Third Parties

One common challenge with DPOAs involves third parties, such as banks, who may be hesitant to honor these documents due to concerns about their validity or the principal’s mental capacity. The MUPC provides protection for third parties acting in good faith, but some institutions impose arbitrary limits on the acceptability of DPOAs. To mitigate this, agents may be asked to provide an affidavit confirming their authority at the time of action.

Revocation and Termination

An agent’s authority under a DPOA can be revoked by the principal, but such revocation is only effective against third parties once they are notified. Unlike a health-care proxy, a durable power of attorney does not automatically terminate upon divorce or separation, which could lead to unintended consequences if not addressed promptly.

For a comprehensive understanding of durable powers of attorney and their role in incapacity planning, consider consulting with an attorney specializing in estate planning. For personalized advice and assistance tailored to your specific needs, feel free to reach out to me directly. Understanding these nuances can significantly impact how well your estate plan serves you and your loved ones.

If you have any questions or need further guidance on durable powers of attorney or any related matters, please do not hesitate to contact my office at (781) 761-2148 to schedule a free consultation. As an attorney who drafts powers of attorney, I can offer you advice tailored to your individual circumstances.

Facebook
Twitter
LinkedIn

Cote Law Group

Are you ready to avoid probate, minimize taxes, reduce the risk of lawsuits, and protect your family?

Sidebar Form

By submitting your phone number and email on Cote-law.com, you consent to being contacted by Cote Law group , for assistance with your legal needs. Your information will be kept confidential in accordance with our Privacy Policy.

Cote Law Group

Protect your family by planning for the future.

Pop up Form

By submitting your phone number and email on Cote-law.com, you consent to being contacted by Cote Law group , for assistance with your legal needs. Your information will be kept confidential in accordance with our Privacy Policy.