Selling a Property with a Power of Attorney Document

– Why Does the Bank Want Something More?

So Aunt Gertrude has named her Niece Milly as her attorney in fact through the power of attorney document. Suppose Aunt Gertrude wants to sell her house, but because of infirmity, she is unable to go to the bank to take care of any financial arrangements, or to the realtor’s office for the closing. Is the power of attorney document she already executed sufficient to allow Milly to show up at the closing and to sign the myriad of papers required to sell a home today?

The answer is “probably.”

Recently (within the past two years), some banking and other financial institutions are requiring very specific language in a power of attorney document in order to complete real estate transactions. At first blush, the document the bank is handing you looks nearly identical to the fully executed power of attorney document you handed to them (just before they refused it).  These institutions are trying to protect themselves.

If Aunt Gertrude is not careful, she may not be able to sell her house after all. Not because she doesn’t want to sell it, or because she doesn’t have a willing buyer, or because the buyer does not have the money. No, it could be because the power of attorney document, though it was thoroughly written and is perfectly legal, does not make this particular financial institution happy.

So what is the moral of the story? If you or a loved one is selling or buying real property (i.e., real estate with or without a building on it), show the power of attorney document to the lender at least thirty days in advance of the closing date.  That way, if your lender wants to have you execute their own version of a power of attorney document, you will have time to take the “special” document to your attorney for his or her review and execution, and the closing date will not have to be rescheduled (and the sale of Aunt Gertrude’s house).  

Keep sending us your feedback. We will try to incorporate some of your questions into the upcoming adventures of Aunt Gertrude and her niece Milly.

Should Your POA Be Paid?

       Aunt Gertrude, our elderly character, and her niece Milly, the attorney in fact through Aunt Gertrude’s Power of Attorney, face life every day, just like you and I do. The difference is that there is this added level of responsibility for Milly. She not only takes care of her own life, her own needs, and her own dreams, but she is the attorney in fact for her Aunt Gertrude. So what does that mean to Milly? What added responsibility does Milly carry? And what does Milly get for taking on this burden?

       How about payment?

       This step is often completely overlooked. Aunt Gertrude and Milly could make a fair arrangement of payment-for-services.  In most cases, Power of Attorney documents are drafted as a part of a complete package of protective documents – Last Will and Testament, Living Will, Medical Directives, Power of Attorney, and so on.  Payment is not a consideration when you are discussing the creation of a ‘safety net.’

       You should be aware, however, that it is completely within the bounds of the law for a principal (here, Aunt Gertrude) to pay an agent (here, the attorney in fact, Niece Milly) for work that is performed by the agent on behalf of the principal.

       So what is fair?

       The answer to that is as diverse as our great country is diverse. Aunt Gertrude and her Niece Milly are free to negotiate any agreement they like. Perhaps if they approach this subject now, before any misunderstandings occur, they will be less likely to have a ‘cat fight’ later if a problem occurs between them (like Milly helping herself to something that, perhaps, is more than her dear Auntie would have liked – like her MONEY!).

       This topic is a new one within the power of attorney discussion. We’ll move this along a little further the next time.

        Continue to send us your comments. . .we’re having a little trouble allowing the comments to be shared online. We see them, but now (if we can finagle the technology) we are going to allow you to see them, too!

So Aunt Gertrude Needs Help. . .?

           Most of us have an “Aunt Gertrude” who needs someone to help look after them.  Perhaps she’s a little less spry than she used to be. Perhaps she is less clear than she used to be when you talk to her. You wouldn’t want her to have to live in a nursing home, but you can’t have her living in your home.  So what do we do?

That’s where Aunt Gertrude’s niece Milly comes in. Milly is willing to help, and will do anything she can to help dear Aunt Gertrude. And when we’re at the Christmas dinner with the family, and we hear “Milly took Aunt Gertrude to the attorney, and now she is helping her. She’s the ‘power of attorney’ for Aunt Gertrude.”

We think,  “Awww. Isn’t that nice? We’re so happy that someone stepped up to help.” And we move on to the next topic, or the next course of our meal.

But not Aunt Gertrude. Her life is now in the hands of someone else. She can’t outrun Milly, she can’t out-think Milly. She is completely dependent on Milly’s good character. There are a few problems with this scenario.

First, what if Milly has ulterior motives? What if she doesn’t have Aunt Gertrude’s best interests at heart?  Second, where is the oversight? Who is watching Milly? No one.

At Mateya Law Firm, we have worked with attorneys, bankers, financial investors, and accountants around the state to create a power of attorney document which gives the attorney-in-fact (the name of the person who is appointed through a power of attorney document) all the powers that are available under the Pennsylvania Statutes, but also has an automatic oversight clause, written directly into the document. We can help you strengthen your power of attorney document. Contact us. We can help.

A Limited Power of Attorney

       A power of attorney document can be drafted without limitations, such is a durable power of attorney. It can also be drafted with limitations, a limited power of attorney. There are advantages to a limited power of attorney. I will discuss a few of the more common limited powers which I have seen.
       First, an Attorney-in-Fact’s powers can be limited by time. If you know you will be out of the country for a certain amount of time, the power of attorney document can state that it is valid “until I return to Cumberland County sui juris (in my right mind).” This may help when your physical  absence and the assistance you need go hand-in-hand.

An Attorney-in-Fact’s powers can be limited in scope. For example, if the powers included are financial, you may wish to give your Attorney In Fact the power to write checks on your account “not to exceed five thousand dollars in any twenty-four hour period.”

The particular facts of your situation may also guide how the power of attorney document is drafted. I recall one such incident where the Principal was travelling out of the country and needed someone to transact one particular piece of business for him. His cousin was his chosen Attorney in Fact because his cousin was in the same business. The problem was he didn’t trust his cousin very far.

We drafted a power of attorney document which empowered his cousin to take action as it related to this very narrow issue, up to a certain dollar amount, until such time as he (the Principal and Grantor of the power of attorney) returned to his home country, sui juris. It was as close to an ‘insulting’ power of attorney document as I ever drafted. The cousin was not insulted, however, as he stood to make a nice profit when the deal went through.

So before you zoom out and use a software package or a web site to download a power of attorney document, consider carefully what limitations you would like. . .and have your estate planning attorney craft just exactly what you need.

Revoking Power of Attorney

     Suppose we have to remove an attorney in fact. Suppose that Aunt Gertrude’s attorney in fact, her niece Milly, has been less-than-honest with her Aunt Gertrude. How does Aunt Gertrude go about removing her? Every state has different laws, so your Aunt Gertrude will have to be sure that she is taking actions which work for her situation and in her jurisdiction.   

     The first thing to know is this: You may remove your attorney in fact as long as you are in your right mind (sui juris).  In civil law the phrase sui juris indicates legal competence, the capacity to manage one’s own affairs. 

      Don’t let anyone tell you that now that I’m your “Power of Attorney, you can’t tell me what to do.”  You are still the boss.

      Next, you have the right to appoint anyone you trust. It does not have to be a family member. And you can make the change for any reason, or for no reason at all. The choice is yours.

      Finally, to remove the person appointed as your attorney in fact, notify him or her, preferably in person and in writing. Have your attorney notify them as well.  

      Aunt Gertrude should tell Milly that she is no longer her attorney in fact. Aunt Gertrude should write to Milly, certified mail if possible. And Aunt Gertrude’s attorney, if it’s not too much trouble, should contact Milly, via writing, that she is no longer the attorney in fact for Aunt Gertrude.

      Sound like too much work? Then, at least tell Milly of the change, and tell your bank, the place where the money resides. They can help you from there. Your local County Office of Aging can also help you. Aunt Gertrude can make the change. She might need your help. Be there for your Aunt Gertrude.

Power of Attorney - When Is It A Bad Idea?

Suppose your Aunt Gertrude can use help with around the house. She isn’t as spry as she used to be. She likes living in her own house, but she needs some help. Physically. She needs help at the grocery store. Some days, her rheumatism is so bad that she doesn’t want to go. She could use a helping hand.

So her niece Milly offers to lend a hand.  “Isn’t it nice of Milly to give up her Saturday afternoon to help poor, sweet Aunt Gertrude?”  The neighbors all think it’s so sweet.

And it probably is. Most of us love helping our family members. We wouldn’t think of taking advantage of them. But far too often, things turn sour.  Like the Watertown, New York man who was helping a woman in her 90’s. He helped himself to over two hundred thousand dollars. Or the Naples Florida man who ran up thousands of dollars on his 78 year old mother’s credit cards. Both of these are recent stories. Do a word search on any internet browser with “Power of attorney” and stealing money. You will find the ‘crisis du jour’ for some senior citizen.

So when should you not suggest Aunt Gertrude appoint an attorney-in-fact through a power of attorney document?

·         When all she needs is physical help.

·         When she still has the power of reason to make her own decisions.

·         And, especially when she is frail physically, but alert mentally.

        “But she looks so helpless.” or “It would be great for her to not have to worry about her bills.”  I have had 90 year olds who not only still pay their own bills, they still help manage their investments.

       The problem of appointing an attorney in fact for a feeble senior citizen is that they are easily bullied. Today’s tip is to  be sure that the attorney in fact in your aunt Gertrude’s life is, indeed, watching out for Aunt Gertrude’s best interests. And not his or her own.

    

Power of Attorney -- When Can It be Signed?

    Our blog features the fictitious story of Aunt Gertrude and her niece Milly who serves as her attorney in fact through the power of attorney document. The question must be raised in each such situation -- Was Aunt Gertrude aware of what she was signing? Did Milly or the attorney thoroughly explain the document which she was signing? What were the circumstances surrounding the signing of the power of attorney document? We will address this last question first.

    Any person signing, also referred to executing, a legal document must be aware of what it is he or she is signing. The signing must also be completed freely without coercion or duress.

    If Aunt Gertrude went to visit an attorney whom she knew -- perhaps one who had done legal work for her in the past -- and she was comfortable with the attorney, it is more likely that she will be willing to ask questions. Aunt Gertrude would feel more at ease with the surroundings...she’s been in this office before. The personal comfort level matters.

    Conversely, if her niece Milly takes Aunt Gertrude to an attorney who she does not know, and to an office in a part of town with which she is not familiar, she will be less comfortable. Aunt Gertrude will be less likely to ask questions. She is ‘out of her element’ and more fearful. She is less likely to ask questions.

    It is the attorney’s job to be sure that Aunt Gertrude has the mental capacity to sign the power of attorney document. The attorney must “take stock” of Aunt Gertrude’s mental capacity.  It is the attorney’s duty to be sure that Aunt Gertrude is properly aware of her surroundings and knows the time in which she is living. Most importantly, the attorney must be sure that Aunt Gertrude is aware of the consequences of executing a power of attorney document.

    If the attorney is not convinced that Aunt Gertrude is not aware of her surroundings or the time in which she lives, he or she is duty bound not to execute the document. If the attorney is not convinced that Aunt Gertrude understands the consequences of signing a power of attorney document, he or she is equally duty bound not to execute the document.

    It is important to remember, whether you are taking your Aunt Gertrude to sign a power of attorney document, or you are the one who is appointing an attorney in fact to act on your behalf, don’t sign anything that you do not understand. Don’t sign anything with which you are uncomfortable or that makes you fearful of losing control. 

    Follow us as we provide suggestions to help protect you and your loved ones from the many abuses of  the power of document.