Redwood Caregiver Resource Center
141 Stony Circle, Suite 200
Santa Rosa, CA 95401
(707) 542-0282 or (800) 834-1636
Fax (707) 542-0552
Serving: Del Norte, Humboldt, Mendocino, Lake, Sonoma,
Napa & Solano Counties
Durable Powers of Attorney
Andtrustedserve as attorney-in-fact; itrelative orbe
Any Revocable as a spouse, Trusts
person, such Living
an attorney. Also, there are several non-profit agen-
There are various legal mechanisms which can assist cies which will fill this role. It is always a good idea
in the management of assets and health care when a to name at least one alternate attorney-in-fact to
person becomes incapacitated. Below we discuss serve in the event that the first choice becomes dis-
three of them, Durable Power of Attorney, Durable abled or dies. Your attorney-in-fact will have broad
Power of Attorney for Health Care, and Revocable authority
Living Trusts. For additional information, also see
Fact Sheets on Legal Planning for Incapacity and
Conservatorships. These matters can be complex and it is critical that the person that you chose to
and confusing; be sure to consult an attorney knowl- serve in this capacity be completely trustworthy and
edgeable in this specific area of the law for assis- sensitive to your wishes.
tance in making decisions about legal planning.
Q: What powers can I give to my attorney-in-fact?
Durable Power of Attorney You can give your attorney-in-fact as limited or as
Q: What is a Durable Power of Attorney for Asset broad powers as you desire, including the powers to
Management (DPA)? buy property, to invest, to contract, to engage in tax
planning, to make gifts, and, very importantly, the
A Durable Power of Attorney (DPA) is a document power to plan for government benefits, such as SSI
which allows you (the principal) to give authority to and Medi-Cal.
another person (your agent or attorney-in-fact) to
make financial/legal decisions and to make financial Q: What is a springing Durable Power
transactions on your behalf. A "Durable Power" dif- of attorney?
fers from a "general" power of attorney because it
remains effective even if the principal is mentally in- Ordinarily, a DPA is effective as of the day it is
competent. signed and executed. This means that even if you are
competent to make your own decisions, your
Q: Who can execute a Durable Power attorney-in-fact will also have the legal authority to
of Attorney? act on your behalf and engage in financial transac-
A person must be competent in order to execute a
valid DPA. If there is a question regarding compe- A "springing power of attorney," on the other hand,
tency, it is a good idea to get a doctor's letter or dec- becomes effective at a later date, usually when the
laration regarding the competency of the principal at principal becomes mentally incompetent—it
the time the document is executed. "springs" into effect at the point you lose capacity,
as certified by a physician, or other designated indi-
Q: Who can serve as attorney-in-fact? vidual.
Q: What are the advantages of a Durable Power of
A DPA is a relatively easy, inexpensive mechanism and the attorney is assured of the principal's
for allowing another person to handle your legal and competency.
financial affairs. Unlike a joint tenancy bank ac-
count, which is often used by people as a manage- Durable Power of Attorney for
ment device in the event of incapacity, a Durable
Power of Attorney does not give your attorney-
in-fact legal access for his or her own use. Your at- Q: What is a Durable Power of Attorney for Health
torney-in-fact must use your assets for your benefit. Care?
A document by which you select another person
Also unlike joint bank accounts, a Durable Power of
(your agent or attorney-in-fact) to make health care
Attorney allows for surrogate decision-making with-
decisions for you. It remains in effect indefinitely.
out disrupting your estate plan. When you create a
For those who have executed the document before
joint tenancy bank account, you not only give your
January 1, 1992, the DPAHC must be renewed after
"joint tenant" access to your funds, but on your
seven years, unless the principal is no longer compe-
death, all of the funds in that account will automati-
tent when the seven-year period expires and the
cally go to the joint tenant, by right of survivorship.
DPAHC remains in effect.
Assets in a joint tenancy account are not subject to
your Will. A Durable Power of Attorney, on the oth- Q: What if I am competent to make my own health
er hand, in no way affects the disposition of your as- care decisions?
sets upon your death and in fact, ceases to be effec-
tive when the principal dies. You have the right to make your own health care de-
cisions even if you have executed a DPAHC. The
A properly-drafted DPA can give you the flexibility DPAHC is effective only if you are not competent to
to plan for government benefits. For example, the at- make your own health care decisions.
torney-in-fact can be given authority to transfer the
principal residence to your spouse if you needed to Q: What powers can I give my attorney-in-fact?
be in a nursing home or required government The powers which you can give to your agent pur-
assistance. suant to a DPAHC include:
Q: What are the disadvantages of a Durable Power The right to refuse or consent to treatment;
of Attorney? The right to access medical records;
The main disadvantage of a DPA is that it is subject The right to withdraw life sustaining treatment;
to abuse because there is no ongoing court supervi- and
sion of the attorney-in-fact. Unlike conservatorships, The power to make anatomical gifts.
where an accounting is required to be submitted to
the court, the attorney-in-fact's actions are not being Revocable Living Trust
supervised on an ongoing basis. If the attorney-in-
fact abuses his or her authority and acts improperly, Q: What is a Revocable Living Trust?
a court can step in and take action. However, in A living trust is an arrangement in which a person
many cases the damage is already done and it is dif- transfers ownership of their assets from themselves
ficult to undo it. Thus, great care should be taken in to another entity, the trust. The person creating the
selecting your attorney-in-fact. trust is the settlor. The person who manages the trust
is called the trustee. The person for whose benefit
Q: Do I need a lawyer to have a Durable Power of the trust is being managed is called the beneficiary.
Attorney drafted? The same person can be settlor, trustee, and
There are advantages in having a lawyer draft a beneficiary.
DPA. First, an attorney-drafted DPA can be drafted
to meet your individual needs. Although there are Thus, you can set up a trust with your own assets
pre-printed forms available, they are worded broadly and retain complete management and control of the
and do not give you as much flexibility. Second, assets by acting as your own trustee, or you can des-
since DPAs are subject to abuse, it is a good idea to ignate someone else as trustee to manage the assets
meet with an attorney to make sure both the princi- for you.
pal and attorney-in-fact understand the document It is called a "living trust" because it is created dur-
ing the settlor's lifetime. This is different from a
"testamentary trust" which is created upon the death trust estate, and you may want to interview several
of the settlor. trust companies before you choose one.
Q: How does a living trust function as a manage- Q: Is a living trust right for everyone?
ment device if I am incapacitated?
For many people, a living trust is an ideal arrange-
In the event that you are incapacitated, the trust can ment both for management of assets and as a Will
provide for an alternate trustee, whom you have se- substitute. However, it is not right for everyone. Un-
lected, who will manage the trust funds for you. The der a living trust, the trustee who manages the assets
trust document should spell out how the determina- has an obligation to use trust assets only for the ben-
tion of incapacity is made. eficiary's benefit, but there is no ongoing court su-
pervision of the trustee. Thus, there is less protection
Q: How does a living trust serve as a substitute for in case of mismanagement of assets than there is in a
a Will? conservatorship.
The trust document provides for the distribution of
Also, a living trust is more costly to have drafted
the settlor's assets upon the settlor's death. Thus, on
than a Will. These are costs that a person pays dur-
the death of the settlor,the trust assets are distributed
ing their lifetime, as opposed to probate costs, which
by the trustee directly to the beneficiaries who are
are paid after a person's death by his or her heirs.
designated in the trust instrument. There is no auto-
Further, in order for a living trust to function effec-
matic court supervision or probate of this distribu-
tively, it must be fully funded. That entails, in some
tion process as there is in a Will. This is generally
cases, considerable effort on behalf of the settlor in
less costly and faster than the distribution of assets
terms of transferring assets into the trust.
pursuant to a Will.
Q: If I have a living trust do I need a Will?
In order for a living trust to function as a Will sub-
stitute and avoid probate, the settlor's assets must be Although a living trust functions as a Will substi-
transferred into the living trust during the settlor's tute, it is necessary even with a living trust to have a
lifetime. "pour-over" Will. A pour-over Will makes sure that
any assets that were not transferred into the trust
Q: Does a living trust save taxes? during the settlor's lifetime are poured over into the
trust on the settlor's death. If all of the settlor's assets
The same tax planning strategies can be utilized in a
have been transferred into the trust during the sett-
Will as well as a living trust. The use of a living
lor's lifetime, the pour-over Will will never be used
trust does not in of itself save taxes, but a living
and will never have to be admitted into probate.
trust may be one vehicle for doing tax planning.
Q: If I have a living trust do I still need a Durable
Q: Can a living trust be used to obtain Medi-Cal
Power of Attorney for Asset Management?
It is usually advisable to have a DPA for Asset Man-
For people who are facing the need for long-term
agement in addition to the living trust. This is be-
custodial care, Medi-Cal, California's medical pro-
cause there are some decisions that have to be made
gram for the indigent, is often explored as a source
on your behalf which do not come within the powers
of coverage. Putting your own assets into a revoca-
of a trustee.
ble living trust does not shield or protect those assets
for Medi-Cal purposes.
Q: If I have a living trust do I still need a Durable
Power of Attorney for Health Care?
Q: Who can serve as a trustee of a living trust?
Yes. A trustee under a living trust does not have the
A trustee can be an individual, such as a family
authority to make medical decisionson behalf of the
member or friend, or it can be a bank or other finan-
settlor. A trustee can use trust assets to pay for med-
cial institution. If you choose an individual to serve
ical care, but they cannot make medical decisions.
as trustee, you want to make sure that he or she is
obviously trustworthy, and is able to manage your
assets. Some people prefer a neutral third party, such Credits
as a bank or trust company. These institutions do This fact sheet was written by Harriet P. Prensky,
charge fees, usually based on a percentage of the certified elder law attorney. Ms. Prensky is a partner
in the law firm of Prensky & Tobin in Mill Valley,