Commentary On Specimen Durable Power of Attorney
Preamble: Revoking a durable power of attorney by a statement in a
subsequent power of attorney is of little or no effectiveness unless those to
whom the initial durable power of attorney has been presented have been
informed of the revocation. However, it may be of some evidentiary value if
the successor attorney in fact were to sue the holder of the initial power. In
some states, by statute, the person to whom a durable power of attorney is
presented may rely upon it until he has actual knowledge of its revocation.
1. This power of attorney is drafted to be effective immediately. It is not a
There is a difference of opinion about “springing” power of attorney.
The author feels that the use of a “springing” provision is not desirable.. A
durable power of attorney is as good as the degree of its acceptance; if a
bank teller must sent the instrument to counsel to be reviewed, and the
ultimate acceptance takes several weeks, this may not be of much help.
How is the person to whom the durable power of attorney is presented
to determine that the durable power has sprung? Connecticut statute
provides that the draftsman may specify someone who has the authority to
execute an affidavit that springing power has sprung; however, there are
understood to be problems with securing the acceptance of this by banks and
other financial institutions.
Further, if the power of attorney ceases to be effective if the attorney
in fact recovers competence, how can the person to whom the document is
presented be sure of this? For this reason, we recommend that the durable
power of attorney be held in escrow by a third party and released when the
conditions set forth in the escrow agreement have been satisfied. For
example, the document might be released when the escrow agent is
presented with a letter from a physician certifying that the principal is
incompetent, or when the principal, while competent, directs that the
document be released. We have furnished a specimen escrow agreement, for
the use of counsel.
Another argument in favor of immediately-effective powers is that it
enables the attorney in fact to act immediately, when action is required,
without the delay which may be involved in obtaining a determination by a
physician as to incompetence.
Some state laws (apparently including Florida) do not provide for
Often the client does not wish to execute a power of attorney that is
effective before the client becomes incompetent, because the client is
concerned that the attorney in fact may be dishonest or unreliable. This
argument ignores the fact that most problems with durable powers of
attorney arise out of actions taken after the principal becomes incompetent.
The arguments in favor of springing powers of attorney include the
a) The escrow agent is relieved of the responsibility of determining
whether the conditions precedent to release of the document pertain.
b) The escrow agent is relieved of the potential problem of dealing
with a disagreement with the principal as to whether the principal is or is not
c) Clients are reported to like springing powers.
d) Springing powers may put the issue of competence in the hands of
physicians, who are better qualified to determine competency.
2. This form is a general power of attorney. It may be appropriate to have
the client execute several special powers of attorney, each limited to the
performance of one or several acts, and each naming a different attorney in
fact. This is particularly true if the work to be performed by the attorney in
fact requires particular knowledge or expertise.
Some clients propose having two attorneys in fact at the same time in
the same instrument; for example, two of their children. Such a designation
may present substantial problems, from the point of acceptance of the
durable powers of attorney, (do both attorneys in fact have to present
themselves with the document to a bank or brokerage house?). It may be
better, if there is a problem of equality of responsibility, to name one child
as an attorney in fact for certain duties, and another child as attorney in fact
for other duties.
3. No comment.
4. No comment.
5. This provision is designed to comply with Florida law, which seems
to be more restrictive than that of most other states. If this durable power of
attorney is intended to be used in connection with real estate in Florida, it
would be well to leave a blank area measuring three inches square in the
upper right hand corner of the first page, and a blank area measuring three
inches wide by one inch deep in the upper right hand corner of each
subsequent page, in order to comply with Florida recording protocol.
6, The draftsman must consider whether the trust to be established by the
attorney in fact is intended for asset management or for estate planning. The
power to establish and amend trusts is an extremely broad power, and is, for
many purposes, equivalent to the power to make, amend, or revoke a will,
which is not permitted under state law, (see Restatement (2d) of Agency)
except for Washington; see Washington Rev. Code §11.94.050) because the
attorney in fact can establish a trust, transfer all or most of the principal’s
property to the trust, and leave little or no probate property for a will, or laws
of intestate succession, to act on.. Some state statutes (for example, 20 Pa.
C.S.A., Section 5603(b)(1)) require that any trust created by an attorney in
fact must terminate when the principal dies and then pour over to the
principal’s probate estate, in order to limit the estate planning power of the
attorney in fact. If the attorney in fact is to establish a trust on behalf of
principal, the laws of at least two states (California – Probate Code Section
4262(a)) and Missouri – Section 404.710(b) Vernon 1990)) require a
specific reference to the power in the document.
There are many unanswered questions. For example, suppose that the
attorney in fact makes an irrevocable trust, and, later, a guardian or
conservator is appointed for the attorney in fact, and the guardian or
conservator determines that the provisions of the irrevocable trust are not
appropriate? Should the draftsman limit the power to establish a trust to
establish a revocable trust only?
7. The power to exercise disclaimers can be very valuable. If the
exercise of a disclaimer by an attorney in fact on behalf of the principal of a
disclaimer could shift a beneficial interest directly from the principal to the
attorney in fact, and such is intended, the second sentence in (7.) is essential.
If that provision were not included, the exercise of the disclaimer could be
void or voidable under state law.
8. This language is approved by the Securities Industry Association. It
should, in theory, be accepted by all securities brokers. Notwithstanding
this, we expect that there will be some brokers who will not accept it and
will wish their own form to be used. With this in mind, we have included a
“bootstrap” provision which authorizes the attorney in fact to execute
whatever form of power of attorney is desired by the brokerage house.
9. This power should be granted with great care, and it may be well to limit
it, or to provide that the attorney in fact should see the advice of a trusted
lawyer or accountant, upon whom the attorney in fact may rely without
being guilty of delegation of the decision-making duty.
10. The power to make an estate plan is an especially broad one, and the
draftsman may wish to limit or omit the power. For example, the attorney in
fact might be forbidden to make an estate plan in which he or his family
would benefit, or might be limited in other ways.
In many states a guardian, conservator, or curator, by statute, may
make an appropriate estate plan for a ward. In Alabama it was once (but not
since the adoption of the Guardianship and Protective Proceedings Act)
possible for a curator to execute a will for a ward, with court approval.
11. Under the laws of most states, unless the attorney in fact is given
specific authority to make gifts, no such power exists, because making gifts
of the principal’s property generally will not be in the best interests of the
principal. The lack of a specific power to make gifts would render any
property given by the agent includible in the estate of the principal for
federal estate tax purposes, unless it were possible to show that the attorney
in fact had authority based on a pattern of conduct by the principal or that
the attorney in fact had been instructed to make such gifts. See TAM
9513001. The basis for inclusion in the estate of the principal for federal
estate tax purposes is that the principal, or a guardian or conservator acting
on the principal’s behalf, could recover the unauthorized transfer.
To determine whether the attorney in fact has the authority to make
gifts, look to the decision of the state’s highest court. For purposes of
federal courts, decisions of lower state courts will not bind federal courts.
See Estate of Bosch, 387 US 456.
It may be desirable to amplify, or place restrictions upon, the power of
the attorney in fact to make gifts. For example, reference may be made
solely to Medicaid planning, or solely to a prior pattern of giving by the
There are many other limitations which might apply. For example,
the principal might wish to specify that if the attorney in fact were a child,
and made gifts to his family, then he should similarly make gifts to his
siblings or the issue of any deceased sibling.
12. Under the laws of most or all states, a gift by an attorney in fact to
himself is void or voidable unless specifically authorized in the durable
power of attorney. An unlimited power to make gifts to oneself would
amount to a general power of appointment, and could cause the assets of the
principal to be includible in the estate of the attorney in fact for transfer tax
purposes, under I.R.C. Section 2041 if the attorney in fact were to die while
holding the power. One way to avoid this problem might be to execute
several durable powers of attorney, and authorize an attorney in fact under
another instrument to make gifts to the attorney in fact under the first
instrument. Another possibility would be to limit gifts to an ascertainable
standard, or to a “5 x 5” power.
13, No comment.
14. If the attorney in fact is not specifically authorized under the durable
power of attorney to be paid for services, he may not be entitled to pay
himself from the principal’s funds. If the attorney in fact is a lawyer or other
professional, the instrument should specify the rate at which the attorney in
fact is to be paid, because otherwise he or she may not be able to be fully
compensated for services.
15. The use of the “bootstrap” provision allowing the attorney in fact to
execute specific powers of attorney or other forms required by a bank or
other institution may be useful where there is a question about the
acceptance of the power of attorney.
16. The Veterans Administration does not accept durable powers of attorney
unless they specifically refer to NSLI policies.
17. The Social Security Administration generally will not accept powers
of attorney, and requires that representative payees be appointed. This
language, however, may be of some value if the SSA changes its position.
18. This durable power of attorney is intended to be a “financial power.”
The medical care provision is included to cover the possibility that the
principal has not executed a health care proxy.
19. This language should be sufficient for purposes of the Internal
Revenue Service and state and local tax authorities. For federal tax
requirements, see Reg. 601.503(b) and 1.6012-1(a)(5).)
20. No comment.
21. No comment.
22. No comment.
23. There seems to be no law dealing with the question as to whether the
attorney in fact may change the domicile of a principal. The primary
question involved in determining domicile is the intent of the principal. If
the principal is incompetent, he or she may be incapable of forming an
Intent is subjective. The person desiring to change his domicile must
do a number of things - change bank accounts, make new arrangements for
residence, establish connections with physicians and dentists, etc. If the
principal has the power to do similar acts for other reasons, there would
appear to be no reason for assuming that the holder of the durable power of
attorney could not change the domicile.
24. The power to accomplish the resignation of the principal may be
valuable, as, for example, in the case in which the principal is trustee of a
trust, with a provision that, in case of his resignation or inability to serve, a
named successor will take over. If the attorney in fact can execute a
resignation for the principal, this may avo id the necessity of collecting
medical evidence, etc.
25. If this durable power of attorney is not intended to be a general power
of attorney but is intended to be a limited power, the language in this
provision should be modified.
This is a “boilerplate” provision, intended to paper over any holes in
the powers granted. The draftsman may wish to modify this to remove the
words “ratifying and confirming,” so as to preserve any cause of action
against the attorney in fact who exceeds his authority or is guilty of whatever
degree of negligence the principal wishes to establish.
26. This provision may not be effective in a given case, but it is certainly
worth trying. A major purpose of a durable power of attorney is make it
unnecessary to appoint a guardian or conservator, and we know of at least
one case in which the court has declined to appoint a guardian or conservator
because the attorney in fact could do what was required.,
27. This language is essential to make the power of attorney “durable.”
28. Some financial institutions regard a power of attorney which is more
than three months old as stale. This provision may be of some help.
Under the laws of many states, a conservator or guardian has the
power to terminate the durable power of attorney. The draftsman may not
wish to have the power terminate automatically upon the appointment of a
guardian or conservator.
29. The draftsman should retain one executed counterpart of the durable
power of attorney, so that if the other copies are unavailable, the holder of
the power of attorney will be able to take his copy to the registry of deeds or
some other recording office, and obtain a number of certified copies.
30. No comment.
31. No comment.
32. This provision makes clear the duty to account, which could probably
be enforced in any event. It helps to resolve the concern that the attorney in
fact may be carrying on his or her duties for a substantial period of time
(indeed, the balance of the life of the principal) without any oversight.
If this provision is included in the durable power of attorney, the
person to whom the attorney in fact is to report should be informed by the
principal, and should be furnished with a copy of the durable power of
attorney. The person to whom the attorney in fact is to account might be
someone appointed in roughly the same capacity as a trust protector.
33. This is an attempt to deal with the problem of the institution which
declines to accept the original power of attorney presented to them and
wants the institution’s own form. The power to execute a further power, of
course, opens the door wide for the attorney in fact to do practically
anything in the name of the principal, and therefore the draftsman may wish
to specify that the power to execute another power of attorney may be
limited; for example, the attorney in fact might be authorized to appoint an
attorney in fact to act in the sale of a parcel of real estate, but not otherwise.
Generally, except in the case of a ministerial act, the attorney in fact
may not delegate his powers. The draftsman should consider whether it is
desirable to empower the attorney in fact to appoint another attorney in fact,
and, if so, whether the powers of such subagent should be limited.
34. The designation of a successor attorney in fact creates the same
problem which appears in the case of the “springing” power; how does the
person to whom the durable power is presented determine that the initial
attorney is in fact unable or unwilling to serve? Permitting reliance upon a
certificate of the successor attorney in fact resolves this problem. It does, of
course, require confidence in the successor attorney in fact, but if there is not
such confidence, the successor attorney in fact should not be appointed
anyway. Holding the documents in escrow during the service of the initial
attorney in fact would be one way to work around this problem.
35. In some states, including Florida, liability is imposed by statute upon
institutions which refuse to accept durable powers of attorney. The attorney
in fact may be required to furnish an affidavit stating that the durable power
if in effect, that it has not been revoked, and that no guardian or conservator
has been appointed for the principal.
36. The draftsman must consider what liability is to be imposed upon the
attorney in fact, or from what liability the attorney in fact is to be relieved.
The person designated as attorney in fact should be aware of the
responsibility that he or she is undertaking.
37. It may be helpful to specify where the notice of revocation is to be
recorded. This would help anyone questioning the authority of the attorney
in fact to determine whether the durable power of attorney had been
It may be desirable to obtain a medallion signature guarantee of the
principal, particularly if the attorney in fact will transfer securities.
The names of the witnesses should be printed below their signatures.
These execution provisions are believed to meet the minimum
requirements of all states. The notarization makes it possible to record the
document with your local Register of Deeds or other authority. The fact that
the document is thus recorded may add to its acceptability.
Counsel may wish the principal and witnesses to sign or initial all of
the pages of this durable power of attorney to avoid any question of
substitution of pages.
Representation of the attorney in fact
Questions have arisen as to whether the drafting attorney, the attorney
for the principal, should undertake to advise the attorney in fact as to the
exercise of his duties. It appears that in order to preserve his position with
respect to the principal, he should not, because of a possible conflict of
Suppose, for example, that attorney in fact consults the drafting
attorney, and confides that he has stolen assets of the principal, or managed
the assets in such a way that he is liable for a claim of negligence. Can the
drafting attorney then protect the principal, or, because of the disclosure by
the attorney in fact, is the drafting attorney barred from representing either
If the drafting attorney could not represent the attorney in fact, that
would not be a substantial detriment, since the attorney in fact could
presumably retain any number of attorneys. Not so, however with the
principal – because of the principal’s incompetence, the principal would not
be able to obtain counsel, and, if the drafting attorney were barred from
representing him, he might be left unprotected.
It has been suggested that the draftsman might provide in the
document that the principal waived any conflict of interest that the drafting
attorney might encounter later in his dealings with the attorney in fact.. It
would appear that this would be of no validity, because it is hard to envision
that the principal could be held to have waived a conflict the nature and
extent of which he could not anticipate; furthermore, this might be an unwise
provision in any event, because the principal could be leaving himself
In theory, the drafting attorney might be able to say to the attorney in
fact: “You may consult me with respect to any question of interpretation of
the durable power of attorney, but do not consult me if you have been guilty
of negligence, have stolen funds entrusted to you, or for any other reason
believe that you might be liable to the principal.” In most situations, a
problem would never arise; if one wants to avoid any problems, it would be
best for the drafting attorney not to deal with the attorney in fact. The
drafting attorney initially established the attorney-client relationship with the
principal, and it is to the principal that the primary duty is owed.