A financial power of attorney is a document by which an individual (the principal) designates an agent (the principal’s attorney-in-fact) to manage the principal’s financial estate should the principal become incapacitated or otherwise unavailable. Traditionally, in order to grant authority to the attorney-in-fact, the power of attorney document was required to specifically list every power transferred by the document (i.e., to buy and sell real estate, file tax returns, access bank accounts, etc.). This is called a traditional or long form power of attorney. In an effort to simplify the traditional power of attorney document, the Minnesota Legislature created a statutory short form power of attorney in the early 1980’s. The form utilizes a “check-in-the-box” system that links to Minnesota statutes which dictate the powers granted by the short form. While there are situations where a traditional power of attorney document is more appropriate, most Minnesota attorneys now draft statutory short form powers of attorney for many of their clients.
Last year, the Minnesota Legislature amended the statutory short form power of attorney document to provide greater protection to the principal and to include an explanation of the rights and obligations of both the principal and the attorney-in-fact. The new form took effect on January 1, 2014, and includes an “Important Notice to the Principal” that describes the purpose of the form, the powers granted by the document, the process for terminating these powers, and the duties of the attorney-in-fact. It also includes an “Important Notice to the Attorney-in-Fact” which summarizes the obligations of the attorney-in-fact. The form also specifically excludes the ability to make health care decisions from the powers granted; instead, granting this authority must be accomplished through use of a health care directive, health care power of attorney, or living will. The form adds greater protection for the principal by requiring that the principal specifically identify each attorney-in-fact who is authorized to make self-gifts.
Along with creation of the new form, the Minnesota Legislature passed a statute, effective on August 1, 2013 and applying to powers of attorney executed before, on, or after that date, that allows the principal to petition the Court to require an accounting from the attorney-in-fact, and allows for the principal to recover attorneys’ fees and costs if the Court finds that the attorney-in-fact failed to provide a required accounting. This statute, and the new form, were drafted to provide more detailed information to principals relating to the effects of the form and the authority it grants to an attorney-in-fact, to afford greater protection to principals in granting the authority, and to provide a description of the duties and responsibilities of an attorney-in-fact under Minnesota law.
A traditional or statutory short form power of attorney can be an effective tool to plan for an individual’s future incapacity. We encourage anyone over the age of eighteen to strongly consider seeing a lawyer to discuss creating their own power of attorney document. Please contact us if you have questions regarding this post or would like to discuss your own power of attorney.