By: Carleton Yoder
Many attorneys continuously strive for a better work-life balance, no matter how much of an uphill battle it is. Typically, we are individuals with a strong work ethic, plugging through three years of the Socratic method to earn the privilege to practice law. Once practicing, we have an ethical duty to our clients to zealously represent them. Further, we have our own individual motives, some altruistic and financial, or to achieve Super Lawyer status. While these duties and motives are enough to make it difficult to achieve a desired work life balance, one must also consider that everywhere we go, people ask us questions. Society, particularly our family members, believes that once you are a lawyer you can answer any legal question in any setting. Whether it is a divorce question at a cocktail party, one about Uncle Joe’s real estate closing, or an estate planning question at a child’s sporting event, questions are inevitable.
One of the common inquiries made by family and friends of practicing attorneys is the request to draw up a quick and “simple” Power of Attorney for Property. Some attorneys might think, “sure, it’s a statutory form,” and print one out for the individual to execute. However, while it may seem easy enough to do, attorneys must be aware of the many pitfalls involved in the drafting of such a “simple” document.
We are all becoming acutely aware of our aging population. Each day, 8,000 individuals attain the age of 65, with this high rate continuing for the next fifteen years. Often, panicked and desperate family members are left scrambling to care for their aging loved ones when essential documents, such as a Power of Attorney for Property, are not put into place before a crisis situation arises. If you haven’t had this happen to you yet, it will become increasingly common to receive a request for a Power of Attorney for Susie’s mom or Johnny’s grandma. These family members will call you urgently needing a Power of Attorney for Property for their loved one. They may be a client with whom you have a longstanding relationship and you know the person to be a “good” son, or a personal friend, or even a great referral source. Wanting to help that individual, you may be tempted to go ahead and draft a “simple” Power of Attorney for Property. However, caution must be taken before jumping into action.
Pitfall I: Not Reading the Statute
The Illinois Power of Attorney Act provides a Statutory Short Form Power of Attorney for Property. This Act also stipulates the rules for the Power of Attorney for Property, and provides the scope and authority the agent has in making financial decisions for the principal. The statute dictates the duties an agent has to the principal, specifies options for the duration of the agency, explains its applicability in certain situations, and much more.
The Act itself is far more inclusive than a simple Power of Attorney form may lead one to believe. If a quick Google search is completed, multiple sample forms pop up in the results, each one of them being different than the next. Several will appear to be all-inclusive, while others may seem to possess only the bare minimum requirements. Regardless of the form, the key point to be made is that the attorney who is drafting a Power of Attorney for Property must know not only what the form says and means, but also what the statute conveys and how the two interplay. The statute does not just lay out the Power of Attorney for Property Statutory Short Form; it lays out much more than even the most comprehensive form includes within its pages, and the drafting attorney needs to be aware of this.
One example of the interplay that can occur is if a form neglects to elaborate on who may witness the principal signing the Power of Attorney for Property. If a form is sent out to Johnny’s grandma to sign without direction as to who may serve as a witness, Johnny may just round up a family member to witness grandma appointing him as agent to help her maintain her bank accounts. However, the statute lists limitations on who may witness Powers of Attorney for Property. One of the restrictions on witnesses is that a “parent, sibling, or descendant, or the spouse of a parent, sibling, or descendant, of either the principal or any agent or successor agent, regardless of whether the relationship is by blood, marriage, or adoption,” may not serve as a witness. Other disallowed witnesses include agents, successor agents, attending physicians or a relative of the physician, and owners, operators, or relatives of an owner or operator of a health care facility in which the principal is a patient or resident. This gaffe could have been easily avoided if the attorney had examined the statute and communicated this issue to Johnny.
Using a statutory Power of Attorney for Property form without completely reading and understanding the full meaning of the statute and how it may interplay with an individual’s other legal documents is a huge disservice to the signing principal. Doing so can lead to more problems and unanticipated issues.
Pitfall II: Oversimplification
Another trap for the unwary attorney is oversimplifying the Power of Attorney for Property and its application to certain circumstances. While the Statutory Short Form lays out specific powers which most Power of Attorney for Property forms mirror, the statute allows for the inclusion of powers beyond the scope of those included in the Statutory Short Form. If an authority is not specifically granted in the Power of Attorney for Property form, the agent will not have that ability to act. Therefore, it is important that great thought and client discussion go into this document. If a situation arises in the future that requires the excluded powers, an agent will not only lack the authority to perform on the specific action, but a guardianship, which can be both costly and unnecessarily intrusive, may then be required. The proceeding paragraphs highlight some current powers that are often overlooked and excluded.
In a society that has an elderly population whose numbers continue to grow, and that has increased its efforts helping people with disabilities, these are two areas which require constant attention. Estate planners and elder law attorneys have been increasingly adding special provisions that incorporate long term care planning for disabled or elderly individuals. For example, if Susie’s mom became disabled as the years progressed and could qualify for Medicaid special needs planning, it would be to her detriment if her Power of Attorney for Property did not include a provision that would authorize Susie to be able to move her mom’s assets around in order to take advantage of Medicaid benefits. Despite the importance of such provisions, given the strategies involved in long term care planning, these intricate provisions should not be added to just everyone’s documents without a complete discussion of the issues with the client.
Another hot topic item in the estate planning community is that of Digital Assets. Digital Assets include social media accounts, such as Facebook, LinkedIn, and Twitter, as well as e-mails, blogs, digital photos, and online banking accounts and records. There is regular coverage in the media about loved ones running into issues gaining access to various Digital Assets when a family member passes, due to them not having the right to access the accounts. However, this issue also arises if a loved one becomes incapacitated. Currently, Illinois has no Digital Asset legislation in place. Having a properly drafted Power of Attorney for Property that includes a Digital Asset provision may make dealing with a loved one’s Digital Assets possible in an otherwise unworkable situation. If Johnny did not have physical access to grandma’s bank account and could only log in via a website, banks will often consider this outside the scope of a basic Power of Attorney for Property, and may deny Johnny access. This, and many other Digital Asset headaches, may be avoided with a properly inserted provision.
Business succession planning is a final example of a specialized power an agent may need if the principal becomes incapacitated unexpectedly and the proper corporate documents are not put in place. Adding in a business succession planning provision can grant the agent powers to vote stock, name successors, or have corporate documents drafted up when appropriate.
Regular, run-of-the-mill forms, including the Statutory Short Form, do not include special needs, Digital Assets, business succession, and other specialized provisions. The above examples are the tip of the iceberg on various powers that can be added to the statutory Power of Attorney for Property form. Personal knowledge of the principal and familiarity with the statute and its ability to grant additional powers in addition to those listed is imperative to properly drafting a Power of Attorney for Property form.
Pitfall III: Ethical and Malpractice Issues
As an attorney you are no doubt wondering about the attorney in the examples merely sending a Power of Attorney for Property form to Johnny and his grandma or Susie and her mom, and whether there would be ethical and malpractice ramifications for these actions. Coupled with the fact the attorney may not fully understand the statute and might send out an oversimplified form, the attorney may have possible ethical and malpractice repercussions when drafting a Power of Attorney for Property for the principal. In my short tenure practicing, I have already had to deal with this type of situation and will no doubt continue to find myself in these situations.
In my case, I had to tell a longtime client of our firm that I was not comfortable sending out Power of Attorney forms for his father without meeting his father in person.
The son was a current client of the firm, while his father was a former client. The father had been out of the country for an extended period of time and was now coming back to live in an assisted living facility. The only correspondence I had was with the son, in which he expressed he wanted me to draft up a quick set of documents for his father naming him as the agent so he could manage his father’s affairs. This common situation could end up an ethical nightmare, which can be difficult to explain to a less than pleased client. I told him I wanted to meet with his father in person to check for capacity, and confirm his acknowledgement of the terms of the document as I drafted it. In addition, I wanted to ensure the forms were tailored to any special needs the father may have, partially motivated by the fact I knew he was moving into an assisted living facility. An additional issue that presented itself was who I represented during this whole ordeal: the son or the father? The Illinois Rules of Professional Conduct outline various duties to former clients, prospective clients, and what to do if there is a conflict of interest.
While no red flags were raised by the son requesting the forms to be drafted, an attorney may easily forget that engaging in this practice could come back and result in future issues. Both the attorney and Johnny could be held accountable if Johnny’s grandma lacked capacity, or didn’t know to the full extent what was signed. Additionally, even if the grandma did not meet with the attorney or pay for the services, the attorney should realize the grandma may very well be considered a client now, with all of the Rules of Professional Conduct applying. Even in emergency circumstances where time is of the essence, the attorney should be present at the execution of a properly drafted document to avoid this pitfall.
Any attorney drafting a Power of Attorney for Property, even the established estate planning attorney, should be aware of the significance of this document and how it can affect the client’s life. It is easy to fall into one of the many traps stated above. While routine wills and trusts deal with what happens after a client is deceased, the Power of Attorney for Property personally affects the client while they are alive, and stipulates the outcomes in countless situations. In order to ensure the Power of Attorney for Property fulfills a client’s intent, meeting with the client to fully understand current and future needs is crucial to the process, and should be conducted by an attorney who is competent in the Illinois Power of Attorney Act.
The DuPage County Bar Association grants permission to reprint all or part of the article entitled, ” Pitfalls of the Power of Attorney”, by Carleton Yoder, Volume 27 Issue 9, the June, 2015 edition of the DCBA Brief magazine, with appropriate attribution to the author and DCBA Brief. Copyright 2015, DCBA Brief, All Rights Reserved.
 Baby Boomers Turning 65, AARP, https://www.aarp.org/personal-growth/transitions/boomers_65.
 755 ILCS 45.
 755 ILCS 45/3.
 See generally 755 ILCS 45/2-7, 2-5, and 2-4.
 755 ILCS 45/3-3.6(a)(3).
 755 ILCS 45/3-3.6.
 755 ILCS 45/2-4.
 See generally, ILL. RULES OF PROF’L CONDUCT, 1.8, 1.9, and 1.18 (2010).