Why You Need a Durable Power of Attorney Now!

Planning for unfortunate events such as serious illness or injury is rarely on anyone’s list of favorite pastimes. Sometimes, though, enduring the small discomfort that may accompany preparing for the unexpected will avoid untold anguish on the part of your family and friends. This is certainly the case with the Durable Power of Attorney, an often simple document that becomes so very important if sickness or injury renders you unable to take care of your own affairs.

Power of Attorney Defined

A Power of Attorney is a document in which you (as the “Principal”) allow someone else (the “Agent” or “Attorney-in-fact”) to act legally on your behalf. The Power of Attorney may be limited to very specific actions that the Agent is authorized to take on your behalf. On the other hand it may give the Agent very broad powers. In either event, the Agent you appoint in the Power of Attorney should be someone that you trust without reservation. That could be a family member, an advisor, a trustworthy friend or a bank or similar institution.

The “Durable” Power of Attorney

The significance of having a “Durable” Power of Attorney is best understood if you know what can happen with the plain old garden variety of Power of Attorney.

If you sign a Power of Attorney that is not “durable,” the document remains effective only while you are alive and competent to handle your own affairs. If you become incompetent or die, the Power of Attorney is automatically revoked by law and your Agent is no longer able to act on your behalf. This prevents a Power of Attorney from becoming irrevocable inadvertently, and, until recent times, it was the only way a Power of Attorney could be prepared.

The non-durable Power of Attorney has limited usefulness for family and estate planning purposes, though, because the Power of Attorney is often most needed when you have become incapacitated! That is when you really need someone else that is able to make legal decisions or take other actions on your behalf.

All fifty states now permit the use of a “durable” Power of Attorney that is not revoked simply because the Principal becomes incapacitated or mentally incompetent. This makes the Durable Power of Attorney a far more reliable document, particularly for family and estate planning purposes, since you may now authorize your Agent to act on your behalf even after illness, injury or other cause has rendered you unable to manage your own affairs. Even with a Durable Power of Attorney, however, the Principal’s death causes an immediate revocation of the document and termination of the powers that are given to the Agent.

A Matter of Convenience

The Durable Power of Attorney is often used as a matter of convenience.

Suppose, for example, you have your home listed for sale. You have also planned a long awaited trip to visit Aunt Trixie in Deadwood, South Dakota, and you are concerned that an interested buyer may come along while you are on the road. A Durable Power of Attorney would be handy here to appoint someone you trust to act in your absence to negotiate the sale and sign any documents that are needed to make the deal binding.

The Durable Power of Attorney could be prepared so that it is effective only until the date you plan to return from your trip, and it might describe specific terms that your Agent must include in the sale, such as the minimum sale price that is acceptable to you.

A Matter of Protecting Loved Ones

What happens if, from illness, injury or another cause, you become physically or mentally incapacitated to the point that you are no longer able to handle your own legal affairs?

Let’s suppose again that while you are incapacitated it becomes necessary to mortgage your home to pay your medical bills. Who will sign the mortgage? Even if your home is jointly owned with your spouse, he cannot obtain a mortgage without your signature.

In those circumstances it would be necessary to request the local probate court to appoint a guardian for you that has the power to handle your legal affairs. In many states, this type of guardian is referred to as a “conservator”. Included in the conservator’s powers might be the power to borrow money and sign a mortgage on your behalf making it possible to obtain the funds needed to pay the medical bills.

However, you may have heard that it is advantageous to avoid probate whenever possible, particularly if there is a good alternative available. The delay and expense associated with probate proceedings and the fact that they are conducted in the probate court, a public forum, make that good advice in most circumstances. And there is a better alternative than probate, but it requires you to act before the incapacity arises – you need to sign a Durable Power of Attorney.

When used in this estate planning context, the Durable Power of Attorney is generally worded very broadly to give your Agent the power to step into your legal shoes in almost any circumstance. In effect, you tell your Agent “You can do anything I can do.”

Now, if you have prepared the Durable Power of Attorney and then become incapacitated, no one has to go through a probate proceeding to appoint a guardian or conservator to act for you – you have already given your Agent the power to do so. As you can see, the Durable Power of Attorney can save precious time and expense in critical situations and avoid having your personal affairs become the subject of a public proceeding.

Appointing a Successor Agent

It is often a good idea to appoint one or more successor Agents. The Agent you appoint in your Durable Power of Attorney may die or for some other reason become unable or unwilling to act as your Agent. In that case, you may be left without someone to act for you when you most need that assistance.

Appointing successors to your first choice of Agent helps insure that someone is always available to handle your affairs. Of course, each successor that you appoint should be someone that has your complete trust.

Revoking a Power of Attorney

As long as you are competent, you have the power to revoke your Durable Power of Attorney. To do so, send written notice to your Agent notifying him or her that the document has been revoked. Once the Agent has notice of your revocation, the Agent may take no further action under the Durable Power of Attorney. However, your revocation will not undo any permissible actions that the Agent has taken prior to being notified that the Power of Attorney has been terminated.

You must also notify third parties with whom your Agent has been dealing that the Durable Power of Attorney has been revoked. For example, if the Agent has been dealing with a stockbroker, you must notify the stockbroker as soon as possible. Do this in writing, as well, and do it immediately. Third parties who do not receive notice of the revocation are entitled to, and probably will, continue to rely on the Durable Power of Attorney.

Making the Durable Power of Attorney Effective upon Incapacity.

It is possible to have a Durable Power of Attorney that only becomes effective if and when you become incapacitated. This document is referred as a “springing” Durable Power of Attorney because it “springs to life” on the occurrence of a future event – your incapacity. The document should include a detailed definition of “disability” to make clear the circumstances in which your Agent may act on your behalf.

Knowing that your Agent is unable to exercise his or her powers until you are actually unable to do so yourself may make using the Durable Power of Attorney more comfortable for you. Unfortunately, even with a good definition of incapacity in the springing Durable Power of Attorney, your Agent may find that third parties are simply not willing to make the judgment that you are indeed disabled. If they are wrong, they may be held liable to you for any damages that you sustain as a result of the error in judgment. You may therefore find the springing document cannot be relied upon in all circumstances.

Don’t Procrastinate!

Estate planning is easy to put off. But don’t! Advance planning, such as executing a Durable Power of Attorney, may make a horrible circumstance for you and your family just a bit more bearable.

Going Legal – How to Find & Work With an Attorney For Your Small Business

Deciding Whether to Go Legal

As a former full-time practicing attorney and now a small business owner, I have been on both sides of the fence when it comes to the legal issues a business owner may face. This provides me with the distinct advantage of knowing when to call in an attorney for assistance, as opposed to using another professional, such as an accountant, financial planner, insurance agent, or business coach — or perhaps handling the matter myself. In addition, my background helps me to select an attorney that is the best fit for the business matter at hand. Many entrepreneurs have had limited experience deciding whether a matter needs legal attention and, if so, what type of attorney to retain, how to find the best match, and how to maximize the attorney-client relationship. As an entrepreneur, it is imperative that you understand when to “go legal,” and if you do, how to find and work with an attorney that is the best fit for your issue.

If you are confused about whether your matter needs legal attention or whether you can handle it yourself, try researching the matter on the American Bar Association’s Self-Help online center. Go to Public Resources, then Legal Help, and then Self-Help. The section is organized by state and is a user-friendly resource for determining whether a matter is complex and needs a legal expert, or whether it is something you can handle yourself.

In addition, a good business coach, especially one with a legal background, is a great sounding board to assist you in determining whether an issue is truly legal in nature, and if so, which type of attorney to retain. You would be surprised how many issues appear legal in nature, but turn out to be business decisions instead. So don’t be hasty when deciding whether to go legal!

Not All Attorneys Are Created Equal

So, assuming you have decided to “go legal” and retain an attorney, which one are you going to call? If you broke your arm, would you make an appointment with an allergist? If you had an ear infection, would you seek the advice of a surgeon? Of course not! Yet, everyday, many entrepreneurs contact and use attorneys to handle matters for their businesses that are completely outside the realm of what that attorney specializes in. Yes, attorneys specialize.

First, there is the main issue of whether your matter is civil or criminal in nature. Generally (and, thankfully!), the average legal matter an entrepreneur will face is a civil matter. Thus, you will be dealing with a civil attorney (hopefully in more ways than one). However, civil law is a huge umbrella. Typical small business matters may include incorporation, intellectual property (trademark, copyright, and patent), contract drafting and enforcement, employment or labor law issues, etc. Thus, look for an attorney that specializes in the area you need help with. Don’t be tempted to use your cousin, who is a residential real estate attorney, to assist you with a complex trademark issue. While this may be tempting in terms of saving money, it may (and often does) cost you more money in the long run if the matter is not handled properly. So match the attorney to the problem, and you are on the right track.

If you are unsure what type of legal issue you are even facing, speak up! Talk to a friend or business colleague that is an attorney, and ask his or her advice on the type of issue you are dealing with. You can also call the local bar association, or do some basic internet research to find out the area of law you are dealing with There are several sites that provide basic legal information for non-attorneys, such as Nola, FindLaw and at the Legal Zoom websites. This background research will arm you with enough terminology and basic knowledge to make the best match with an attorney whose legal practice covers the area of your business issue.

Finding an Attorney

So, now that you know the area of law, how do you find a good lawyer that practices in that area? The same way you find any other professional to assist you with your business. Referrals from friends, family and colleagues are a fantastic way to find a reputable attorney. You can also ask your local chamber of commerce, local law school, and local and state bar associations. Still can’t find an attorney that is a great match? Try Martindale-Hubbell’s Lawyer Locator online at http://www.martindale.com

Money Matters

If you’ve never worked with an attorney before, here are some basics of the legal profession with regard to money matters. Most attorneys charge by the hour, so ask what the hourly rate is, and an estimate of how many hours the matter may take. If the matter is small, or a typical one that the attorney handles often, there may be a flat fee for the entire transaction instead of an hourly rate. Be prepared to pay a fee for the initial consultation, which is standard, but not a hard and fast rule. In some cases, the attorney may require a retainer, which is money that you provide upfront that the attorney works off of as the matter progresses.

One thing to consider is that law firms are typically broken down into partners and associates. Partners are essentially co-owners of the firm, while associates are employees, albeit high level professional ones. Who demands the highest rates? Usually, the partners. Thus, ask yourself if you truly need a partner, or can an experienced associate handle the matter. Do you need the best litigator in the firm? Often times, the best litigator may be an associate that is still active in the courtroom, as opposed to a partner that may be more of a rainmaker bringing in business for the firm.

In some cases, for very small matters or legal research, even a law clerk or paralegal may do. Ask who is the best match, and don’t assume it is always the person whose last name is on the door.

Maximizing the Attorney-Client Relationship

I cannot emphasize enough the importance of accurate, concrete, and timely record keeping and documentation when preparing to work with an attorney, and during the relationship. An attorney will need to go on a fact-finding mission in order to best represent you and your business. Help your attorney do his or her job better by coming to the table with all of your ducks in a row. Be prompt in providing requested information, as often legal timelines are at play. Honesty is also vital when working with an attorney. The best attorney-client relationships are built on mutual trust and, thus, withholding information can make or break your case. An attorney needs all of the facts in order to make tough decisions with you about the best course of action for your business matter.

Associate Attorney Employment Agreement

Most law firms that are made up of more than one person are set up as a hierarchy with Partners at the top and varying levels of Associate Attorneys below them. Partners are generally the owners of the business and Associates are employees. The Associates are often given the opportunity to work their way up the ladder to become Partners and share in the profits of the firm instead of just receiving wages.

It is important to have a written agreement or contract between the Associates and the Firm that spells out everyone’s duties and obligations as well as the conditions under which they may advance. The following is a draft contract between an Associate and a law firm that can be customized to meet the needs of a law firm hiring an Associate Attorney.

This AGREEMENT made of this 21st day of March, 2011, between the Law Offices of at Smith, herein referred to as the “Firm” and Joe Blow, hereinafter referred to as the “Attorney.”

Recitals

The Firm is a Sole Proprietorship, operating as a business rendering legal services. If, during the term of this contract, the Firm changes to another form of business organization, this contract will continue to be binding on both the Firm, under it’s new formation, and on the Attorney.

The Attorney is licensed to practice law in the State of Texas.

The Firm and the Attorney desire to have the attorney practice law as an employee of the Firm.

It is agreed by and between the parties as follows:

Section 1. Employment and Duties.

Employment. The Firm employs the Attorney and the Attorney accepts employment as an attorney in accordance with the terms of this Agreement.

Full Time. The Attorney shall devote full working time and attention on the practice of the law for the Firm and the Attorney shall not, without the written consent of the Firm, directly or indirectly rendered services of a professional nature to or for any person or firm except as an employee of the Firm.

Duties and Assignments. The Firm shall determine the duties to be performed by the Attorney and the means and the manner by which those duties shall be performed. The Firm shall determine the assignment of the clients to the Attorney and the Attorney shall perform services for such clients assigned. The Firm determine the rates at which the Attorney’s work shall be billed.

Section 2. Compensation

Salary. For all services rendered by the Attorney under this Agreement, the Firm shall pay the Attorney and annual salary of $58,000, payable weekly or as may otherwise be mutually agreed. The salary may be changed by mutual agreement of the parties at any time.

Bonus. In the addition to the salary specified in 2.1., the Attorney may receive a bonus. The bonus, if any, will be in such amounts as the Firm may determine in its absolute discretion.

Additional Compensation. In addition to the salary and bonus specified in items 2.1 and 2.2, the Attorney will be eligible to receive a percentage of the Firm’s portion of Personal Injury cases. The Attorney will receive 10% of the Firm’s payment from a Personal Injury case, when the Attorney has performed as the primary attorney on that case. Additionally, the Attorney will receive 10% of the Firm’s payment from a Personal Injury case, when the Attorney personally brought the case to the Firm.

Section 3. Partnership. It is the policy of the Firm to employ as attorneys persons who will be given the opportunity to become partners in the Firm. The Firm after a certain number of years will make the determination as to whether the Attorney will be admitted to partnership. The Firm expects to make this determination with respect to this Attorney, no earlier than July 1, 2005, and no later than July 1, 2007.

Section 4. Facilities.

Office. The Firm shall furnish the Attorney with office space, staff assistance, and such other facilities and services as are reasonably necessary to the performance of the Attorney’s duties.

Liability Insurance. The Firm shall maintain professional liability insurance covering the acts and omissions of the Attorney in performance of the Attorney’s professional duties.

Travel. The Attorney may be required to travel on business for the Firm, and shall be reimbursed for all reasonable and necessary expenses incurred, provided, however, that a detailed account of such expense is provided to the Firm.

Professional Societies. The Firm shall pay the Attorney’s dues for memberships in The State Bar of Texas and the American Bar Association.

Education. The Firm shall pay the reasonable amount of expenses incurred by the Attorney to maintain or improve the Attorney’s professional skills. The Attorney agrees to submit to the Firm such documentation as may be necessary to substantiate such expenses

Section 5. Additional Benefits.

Medical Insurance. The Firm agrees to provide medical coverage for the Attorney, the Attorney’s spouse and dependents under a group accident and health insurance policy, the terms and benefits of which shall be determined by the Firm. The Attorney is currently covered under her spouse’s policy and does not require such coverage currently. That Attorney will notify the Firm at such time that she needs this benefit.

Vacation. The Attorney shall be entitled to three weeks vacation time each year however, the Attorney’s vacation will be scheduled at such time as will least interfere with the business of the Firm. The Attorney is further entitled to time off on all holidays normally celebrated in accordance with the Firms stated policy.

Life Insurance. The Firm may provide group life insurance coverage, in amounts which shall be determined by the Firm.

Retirement Plan. The Attorney shall participate in any Firm qualified retirement plan according to the terms of said plan as amended from time to time.

Disability. In the event the Attorney is unable to perform his or her regular duties as a result of personal disability the Firm will pay the Attorney’s salary during such disability for a total of ninety (90) days in any 24 month period.

Section 6. Operations.

Records and Files. All records, documents, and files concerning clients of the Firm shall belong to and remain the property of the Firm. On termination of employment, the Attorney shall not be entitled to keep or reproduce the Firms’ records, documents or files relation to any client unless the client shall specifically request that its files be transmitted to the Attorney.

Fees. All fees and compensation received or realized as a result of the rendition of professional legal services by the Attorney shall belong to and be paid to the Firm. Any fee or honoraria received by the Attorney for professional services or other professional activities performed by the Attorney shall belong to the Firm.

Section 7. Term.

One Year, Automatic Extension. The term of this Agreement shall begin on the date hereof and continue for a period of one year and shall be automatically extended from year to year unless terminated in accordance with this section.

Events of Termination. This Agreement shall be terminated upon the happening of any of the following events:

The death of the Attorney.

The determination of the Firm that the Attorney has become disabled.

Dismissal for cause of the Attorney as hereinafter provided.

Occurrence of the effective date of termination, notice of which has been given in by either party to the other, so long as there are at least sixty (60) days between giving of the notice and the effective date of termination.

The mutual written agreement of the Attorney and the Firm to termination.

Termination on Disability. The Firm may determine that the Attorney has become disabled for purposes of the Agreement in the event that the Attorney shall fail, because of illness or incapacity, to render for ninety (90) days or more in any two-year period, services of the character contemplated by the Agreement, and thereunder shall be deemed to have been terminated as of the end of the calendar month in which such determination was made.

Causes for Dismissal. The Firm may dismiss the Attorney for cause in the event it determines there has been continued neglect by the Attorney if his or her duties, or willful misconduct on the part of the Attorney, including buy not limited to a finding of probable cause by the Bar for investigation a complaint filed with its discipline system or the filing of criminal charges against the Attorney, which would make retention of the Attorney by the Firm prejudicial to the Firm’s best interest.

Section 8. Miscellaneous.

Notices. All notices under this Agreement shall be mailed to the parties hereto at the following respective addresses:

Attorney:____________

Firm: ____________

A change in the mailing address of any party may be effected by serving written notice of such change and of such new address upon the other party.

Invalidity. The invalidity or unenforcibility of any provision or provisions of this Agreement shall not affect the other provisions, and this Agreement shall be construed in all respects as id any invalid or unenforceable provisions were omitted.

Arbitration. All disputes, differences and controversies arising out of, under, or in connection with this Agreement shall be settled and finally determined by Arbitration under the then existing Rules of the American Arbitration Association.

The parties have executed this Agreement as of the date and year first above written.

By:____________________________________________________