Each type has advantages and disadvantages.
A key advantage of the statutory short form (“statutory form”) is that it is typically easily recognized by financial institutions because the language and definitions are set out in Minnesota’s statutes, and the statutory form is the type most commonly used. Because the powers granted under the statutory form can be restricted or can be broad, it works well for most individuals.
The statutory short form is also cheaper to create given that the provisions — with some permissible options — are set out in state law.
A key disadvantage of the statutory short form is that any attempt at modification turns it into a common law power of attorney, which isn’t as readily accepted by financial institutions. Another attribute that can be a disadvantage is that the statutory short form document goes into effect the moment it is signed — whether or not the person granting the power (the “principal”) can still speak for himself or herself.
A common law power of attorney may include a “springing power” to delay the power given to the agent — the so-called attorney-in-fact. Perhaps the principal wishes to delay the attorney-in-fact’s ability to operate until the principal is no longer mentally competent to make decisions related to his or her finances. Note, however, that there may be uncertainty as to what evidence is required to demonstrate that the principal is incapacitated.
The common law power of attorney is more commonly used when the principal has real estate outside Minnesota, or when the principal wants his or her attorney-in-fact to be able to create a trust on behalf of the principal. The attorney-in-fact may not create a trust for the principal under the statutory form. Gifting capabilities are also broader and more flexible under the common law power of attorney, which may make the common law power more desirable when the principal has significant assets.
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