Powers of Attorney and California Real Property

The gap it fills

A will and a trust deal with what happens after death. Neither covers the stretch when a person is alive but cannot make decisions, which for many families lasts longer and causes more trouble.

With no agent in place, a family in that position cannot sell the house to pay for care. They cannot refinance, and often they cannot deal with the property at all. The remedy is a conservatorship, a court proceeding in which a judge appoints someone to manage the property and the money. It is slower, public, supervised and costs more than the document that would have avoided it.

Durability, and why it is the whole point

An ordinary power of attorney ends if the person who granted it loses capacity, which is the exact moment it is needed. A durable power keeps working through incapacity.

Some are drafted to take effect only on incapacity, which sounds careful and brings a practical problem. Someone has to establish that the trigger has occurred, usually through doctors' certificates, and institutions vary in what they will accept. The test has to work in real life, not only on paper.

Real property specifics

For an agent to deal with real property, the document has to grant that authority clearly. A title company or lender will read it closely before relying on it, and general language is often not enough.

Where the property sits in a trust, the trust's own successor trustee provisions may govern instead. The two documents have to work together rather than fight each other. A power of attorney that appears to let an agent deal with trust property they do not control creates confusion at the worst time.

Alongside the rest of the plan

The documents work as a set: a power of attorney for money and property matters, and an advance health care directive for medical decisions. A will, including a pour-over will where there is a trust. A trust where the property is to avoid probate.

Probate Code sections 6110 and 6111 govern how a will is signed and witnessed. They cover the witnessed will, and the holographic will, which is one written out by hand by the testator. Documents drawn up without regard to those rules are the ones that get contested.

The conservatorship alternative

With no valid power of attorney, a family facing incapacity has to petition the court to appoint a conservator of the estate. That is the person who manages money and property for someone who cannot.

That is a full court proceeding, with a petition, notice to relatives, an investigator, a hearing, and ongoing supervision that includes accountings. It takes months to obtain, and it keeps costing money for as long as it lasts.

It also cannot be arranged in advance once capacity is gone, which is the point. The document that avoids it has to exist before it is needed. By the time everyone agrees it is needed, it is often too late to sign one.

Making sure it works when presented

The usual failure is not that the document is invalid, it is that a bank or a title company declines to accept it. Title companies, lenders and banks scrutinize powers of attorney carefully.

Grant real property authority in express terms rather than relying on general wording. Think hard before using a springing power, which is one that takes effect only on incapacity. Someone has to establish the trigger, and institutions differ on what they accept. A durable power that takes effect at once is simpler, and it rests on choosing someone you trust.

Name a successor agent, because an agent who dies first, or cannot act, leaves the family back where they started.

Review it from time to time. A document signed long ago draws more resistance than a recent one, and signing a fresh one costs very little.

How it fits with the trust

Where property is held in a trust, the trust's own provisions govern who acts if the trustee cannot. The power of attorney governs what you hold in your own name.

The two must line up. A power of attorney that appears to authorize dealings with trust property the agent does not control creates confusion at the worst moment. The person presenting it usually finds that out at a bank counter.

The complete set is short. A durable power of attorney for property and money, and an advance health care directive. A will with a pour-over provision where there is a trust, plus the trust itself. Probate Code sections 6110 and 6111 govern how the will must be signed, including a holographic will written out by hand by the testator.

This article is general information about California law and is not legal advice for any specific situation. If you are dealing with this issue, the facts of your matter will change the analysis.