A Power of Attorney document is a powerful document that should be used carefully and wisely. It can be a useful tool, or it can be abused.
The key is to select carefully the person that you name as your agent – known as your “attorney-in-fact”. The person that you name as your attorney-in-fact has power over your financial affairs.
Sometimes even adult children may not be the best choice. For example, earlier this year, a Maple Grove, Minnesota woman was charged with three felony counts for allegedly using the power of attorney power granted to her by her dad to raid his trust fund for her own personal benefit.
Despite the potential abuse, a “durable power of attorney” document is standard procedure in the development of most Minnesota estate plans, and is typically a very helpful document provided that you select a trustworthy attorney-in-fact.
If you eventually become unable to handle your financial affairs yourself and you have no attorney-in-fact, then your family may need to go to court to seek a conservatorship. That can be an expensive and cumbersome route that is often best avoided.
In Minnesota, a Health Care Directive relates to one’s physical being, whereas a Power of Attorney grants power over one’s financial matters. The Health Care Directive doesn’t take effect until the power grantor is incapacitated, but the Power of Attorney document is effective the moment it is signed.
When you select someone to act as your attorney-in-fact, his or her power ends when you die. The power terminates even earlier – upon your incapacity – unless the Power of Attorney document was a “durable” power of attorney. The power can also be limited by the terms of your document to expire on a date that you specify. In Minnesota, when your spouse is the attorney-in-fact, the power also expires in the event that your spouse files for dissolution, separation or annulment of your marriage.
Minnesota law doesn’t allow a power of attorney document to be revoked by simply tearing up the document. Minnesota law states that any revocation is only effective when the attorney-in-fact is given written notice of the revocation.
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