How Can I Give My Agents Under My DPA the Power to Appoint Successor Agents?
This question is about an issue regarding powers of attorney (POAs) that seems to be rarely discussed. About 40 states (including my state) have adopted a version of the Uniform POA Act. This act allows you to give your agent the power to appoint a successor agent. These powers could be critically important if all your original agents became temporarily or permanently unavailable. I’ve looked at many examples of POAs available online and in estate planning books. Some of them permit the agent to delegate certain duties to others, but none give an agent the power to appoint a successor agent. In a trust, it’s essential that a trustee always be available. So it seems to be standard practice for a trust to allow a trustee to appoint a successor trustee if the Grantor is incapacitated and all originally appointed trustees are no longer able to serve. It seems equally important that a POA have a similar “succession plan.”
(1) Why do POAs rarely include the power to appoint a successor agent considering how important this power can be and considering that the Uniform POA Act allows this power?
(2) To include this power in my POA, would the following language be suitable?
2. AGENTS I appoint as my agents John Doe and James Doe. Each agent may act independently without consent or signature of the other agent. Successor agents: If no person named above is available to serve as agent, a successor agent may serve. Section 3.1 below authorizes the appointment of successor agents whose appointment documents may be attached to this power of attorney.
3. POWERS GRANTED TO AGENT 3.1 My agent may appoint one or more successor agents with a notarized writing, The purpose is to ensure that a person will be available to serve as agent if all agents originally appointed in this document are unable or unwilling to serve. This authority is granted under Pennsylvania statute 20 Pa. C.S. § 5602 (b) which states that: “a principal may provide for … the delegation to an original or successor agent of the power to appoint his successor or successors.” If this power of attorney is used in another state, my agent will have this authority if allowed by state law. An appointed successor agent, when acting as agent, has authority to exercise all powers granted by this power of attorney.
Since the power to appoint a successor is not normally included in a POA, third parties will be unfamiliar with it. For this reason, it seems like a good idea to include the statute number and quote the relevant text to help demonstrate its validity. If you already know persons who would be suitable to serve as successor agents, you could simply add their names to your POA. But in my case, my nephews, John and James, are the only persons currently in my life that are suitable to serve as agents. But if I live to 100, they might both die before me. If I become incapacitated, I want them to be able to appoint someone they think would be a suitable successor if they both become unable to serve.
This is interesting. My state of Massachusetts does not permit a durable power of attorney to provide that an agent may appoint their successor, so I was not aware that statutes in other states permit this delegation. I believe that the reason Massachusetts does not grant this power and that many powers of attorney forms in states that do permit it don’t include it is that the appointment seems so personal. The person creating the power of attorney is delegating tremendous power to their agent. That’s fine if they choose people in whom they have great confidence to serve as their agent and potential successor. But to permit someone they potentially have never met to serve in that role may be a step too far for most people. If their agent cannot serve for any reason, they may prefer the protection of a court through a conservatorship or guardianship proceeding.
The absence of potential successors is one of the many reasons we recommend the use of revocable trusts. In addition to including provisions for appointing successor trustees, as you point out, the provide a structure for carrying out the financial management functions. In the absence of family members and friends, attorneys, banks or trust companies can act as trustee. They are less likely to act as agents under durable powers of attorney. The one drawback of trusts is that they only govern finances. Your agent under a durable power of attorney can sign legal documents and tax returns.
You don’t say how old you are, but presumably you’re not too near 100 yet. In any case, your nephews are almost certainly substantially younger than you. So the odds are that they’ll survive you. And if anything does happen, you should have time to appoint someone new to take their places. Of course, you could still do that even if your power of attorney authorizes them to appoint their own successors.
All that said, if you choose to give your agents this power, your language looks good, as does the idea of including a reference to the statute.