Written by Jean Durham, Trust Counsel
A power of attorney (“POA”) for finances and property is an important legal document that allows a person (the “principal”) to authorize another individual or corporate entity (the “agent”) to manage financial decisions on their behalf. If a financial power of attorney is “durable,” then it will not be terminated in the event the principal later becomes incapacitated, which is often the time it is needed the most. Anyone contemplating an estate plan should understand the value that a durable POA for finances and property can provide and what considerations are involved in creating a POA, choosing an agent, and determining the powers to be granted. While it is also recommended to conduct advance care planning for health care, the options and considerations for that are somewhat different and beyond the scope of this article.
Basics of a POA for Finances and Property in Wisconsin
In writing and signed. Chapter 244 (“Chapter 244”) of the Wisconsin Statutes governs powers of attorney for finances and property. To be valid, a POA must be in writing. It must be signed by the principal or by another adult at the direction and in the physical presence of the principal. A signature on the POA is presumed to be genuine if the principal acknowledges the signature before a notary or if the signing is properly witnessed by two witnesses using two-way, real-time audiovisual communication technology, pursuant to the procedure set forth in Wisconsin Statutes Section 244.05(3).
WI presumption is durable. As mentioned above, a “durable” power of attorney is one that is not terminated if the principal becomes incapacitated. A power of attorney created pursuant to Chapter 244 is automatically durable unless it expressly provides that it is terminated by the incapacity of the principal.
WI presumption is effective immediately. Under Chapter 244, a power of attorney is effective when executed unless it provides that it becomes effective at a future date or upon the occurrence of a future event or contingency.
Statutory form available. Chapter 244 includes a statutory POA form. This is a convenient and compliant form which is typically available at banks, medical offices, hospitals, nursing homes, and county clerks’ offices. Alternatively, a principal can have a POA drafted by a Wisconsin attorney, who would be able to ensure it complies fully with Chapter 244 and addresses the principal’s specific needs.
Best to state any previous power of attorney is revoked. An executed power of attorney is not automatically revoked by the subsequent execution of another power of attorney. Instead, if desired, a new power of attorney must specifically revoke any or all other powers of attorney.
Choosing an Agent Under a Financial POA
Considerations. Selecting the right agent is critical because this person will have broad authority to act on the principal’s behalf. The agent should be trusted and capable of managing the responsibilities assigned. Other considerations include the desired agent’s financial acumen, integrity, and willingness to act, as well as their proximity and availability to handle the principal’s affairs. Options typically include a close family member, a trusted friend, or an experienced corporate entity. Chapter 244 requires an agent to act in accordance with the principal’s reasonable expectations or best interest, in good faith, loyally for the principal’s benefit, and with care, competence, and diligence. Agents are entitled to reimbursement of expenses and reasonable compensation.
Agent must accept role. A nominated agent is not obligated to act even if named in a POA. Therefore, it is advisable to check whether your preferred agent is willing to accept the role. An agent accepts appointment by exercising authority or performing duties as an agent or by any other assertion or conduct that indicates acceptance.
Successor agents and co-agents. It is advisable to name one or more successor agents in the event the primary agent is unwilling or unable to serve or to keep serving. Naming two or more persons to act as co-agents is also permissible, keeping in mind that unless the POA provides otherwise, each co-agent may exercise their authority independently.
Policy of Prairie Trust®, a division of Waukesha State Bank, regarding serving as agent. Prairie Trust is willing to be named as agent under a financial power of attorney if Prairie Trust is then serving as investment agent on an account or is nominated as the immediate successor trustee of a revocable trust. Prairie Trust would be willing to act as agent if then serving as the trustee or investment agent. It is recommended that Prairie Trust review the proposed POA in advance to ensure that the desired grant of authority is acceptable.
What Authority to Give the Agent
Consider principal’s needs. The authority granted to an agent under a Wisconsin POA can be broad or limited, depending on the principal’s wishes. Common powers include managing bank accounts, paying bills, handling real estate, filing tax returns, and managing investments. The principal can specify which powers the agent has, tailoring the authority to the principal’s needs. It is important to be clear and specific in the document to avoid ambiguity.
Effect of grant of general authority in Wisconsin. Chapter 244 describes specific powers that are automatically included if categories of general authority are granted to an agent, unless the principal specifies otherwise. Accordingly, if the POA grants unlimited general authority as to topics that are included in various section titles of Chapter 244 (including but not limited to real property, tangible personal property, stocks and bonds, banks and other financial institutions, operation of a business, insurance, estates and trusts, personal and family maintenance, retirement plans, and taxes), the agent has all of the detailed authority described that topic’s particular section.
Limits on Wisconsin Agent’s Authority and Special Powers
Unless specifically authorized in the POA, an agent who is not the principal’s spouse or domestic partner may not use the principal’s property to benefit the agent or a person to whom the agent owes an obligation of support.
Authority that requires specific grant. An agent can exercise the following authority only if the POA specifically authorizes the agent to do so:
- Create, amend, revoke, or terminate an inter vivos trust.
- Make a gift.
- Create or change rights of survivorship.
- Create or change a beneficiary designation.
- Delegate authority granted under the power of attorney, i.e., allow the agent to name a “sub-agent.”
- Waive the principal’s right to be a beneficiary of a joint and survivor annuity, including a survivor benefit under a retirement plan.
- Exercise fiduciary powers that the principal has authority to delegate (for example, the principal’s powers as trustee of their revocable trust).
- Disclaim property.
- Access the content of an electronic communication sent or received by the principal.
How the POA Terminates
Generally. A Wisconsin POA generally remains in effect until one of the following occurs:
- The principal dies.
- The principal revokes the POA.
- The POA specifies a termination event that has occurred.
- The purpose of the POA has been accomplished.
- The principal revokes the agent’s authority or the agent dies, becomes incapacitated, or resigns, and the POA does not designate a successor agent.
Specific situations. If the agent is a spouse and there is a filing for divorce, annulment, or separation, the agent’s authority terminates unless the POA states otherwise. Additionally, if the power of attorney is not durable, it automatically ends upon the principal’s incapacity.
Consider including a durable POA for finances and property in your estate plan arsenal. A POA for finances and property, especially a durable one, is a vital tool that provides peace of mind. Executing a robust and effective POA requires detailed attention to legal formalities, choosing a trustworthy and capable agent, carefully defining the scope of the agent’s authority, and including desired special powers. Consulting with legal counsel is recommended to effectively tailor the POA and ensure compliance with Wisconsin law.