Beware of Pre-Printed Legal Forms

Pre-printed or “canned” legal documents (i.e., downloadable forms, documents borrowed from someone else, or those prepared by non-lawyers), can often worsen a legal situation more than help. The reason most pre-printed forms fail is because such documents do not include provisions needed to resolve common legal issues. Of the many legal documents people try to prepare on their own, often it is a durable financial power of attorney which can create the most problems.

What is a Power of Attorney?

A financial power of attorney is a legal document that establishes an agency relationship between two or more persons. The individual authorizing another to act on his behalf is the “principal” and the person acting on behalf of the principal is the “agent” or the “attorney-in-fact.” Capacity to execute a general power of attorney is necessary and requires that the principal is capable of understanding, in a reasonable manner, the nature and effect of his act. Golleher v. Horton, 148 Ariz. 537, at 540, 715 P2d. 1225, at 1228 (1986).

In estate planning, financial powers of attorney are used to authorize another person to act on one’s behalf during a period of incapacity or when the principal is unable to manage his financial affairs. This type of power of attorney is called a “springing durable power of attorney.” By contrast, a general power of attorney grants the authority to the agent to act immediately for the principal.

Dangers of Pre-Printed Legal Documents

Today, it is easy to obtain pre-printed powers of attorney from the internet, computer software, or even copied from a friend. The danger, however, is that in pre-printed financial powers of attorney three major provisions are often excluded. These provisions are as follows:

(1) The power for the Agent to handle individual retirement account (IRA), Roth
IRA, §403(b) annuity or account, §457 plan, Federal Thrift Savings Plan
(TSP), Civil Service Retirement System (CSRS), Federal Employee
Retirement System (FERS);

(2) The power for an Agent to make gifts, grants, or other transfers without
consideration, of cash or other property, including the power to forgive
indebtedness and consent to gift splitting under Internal Revenue Code
§2513 or successor sections, including the power for the Agent to make
gifts to himself; and

(3) The power for an Agent, (who may also be the Principal’s spouse) to amend a
grantor revocable living trust.

Documents Specified to Meet Your Needs

So, what kind of estate planning documents do you want? Pre-Printed forms and documents copied from someone else? Or a plan that is unique to your needs and particular goals, with documents that work? Whatever you decide, be certain to obtain an estate plan that meets your objectives.

For more information or if you have questions, please contact us at (520) 884-9694 to make an appointment with Robert Michael Way, Attorney at Law, for a one hour no-cost consultation.

IMPORTANT: Neither this blog article nor any information on this website shall be construed as the offering or rendering of any legal advice, and does not establish an attorney-client relationship between the reader and Thompson Krone, PLC (“TK”) or any attorney at TK. You should consult with an attorney if you have a specific question regarding your legal issues.