Legally Preparing for the Unexpected

A trader friend experienced chest pain and numbing feeling all over on her upper body earlier this week. She had such experience before and thought that by resting and taking a few pain killers the troubles would go away. It did not and she was hospitalized that night. Later on she went unconscious. The family is not taking this well. There is also the added worry of her trading account not being attended to as the family knows that she is a full time trader.

The Importance of Having a Continuing Power of Attorney in Place

My friend learned from me for years that legal matters have to be dealt with carefully. Hence she has a continuing power of attorney written many years ago to deal with this type of emergency situations. A continuing power of attorney is a legal document stating that in case of a person not able to make decisions for themselves due to several specific criteria, the appointed attorney, who is not necessarily a lawyer, can make decisions for the person instead. The continuing power of attorney is different from the regular one because it only goes into effect when the person is incapacitated. The continuing power of attorney is also nicknamed the “Living Will” for this very reason.

For my friend, her first appointed attorney is her brother, who is working in Europe and cannot handle the matters for her during this difficult time. I am the alternative attorney named in the continuing power of attorney. This makes me responsible for making all the decisions for my friend during her stay in the hospital. There are many decisions to be made when a person is under the care of medical professionals. I have to be there pretty much 7/24 for a few days until the her situation stabilized.

Sticky Issues with Brokerage Accounts

At this point I am still struggling with my friend’s brokerage legal department to gain access to her brokerage account. She is a day trader, so I know it is not likely she has any open position currently. Even if there is one, her account should be able to absorb any losses incurred.

The main problem with the brokerage is that it need necessary proof of my friend being incapacitated and that my friend actually appointed me as the attorney. Even though they got the written statement from the doctor and the continuing power of attorney on hand, they are still uncomfortable with giving me access her account. They worry that if my friend recover shortly after, the brokerage may be liable for the actions I will be taking on her account.

My intention is really just ensuring there is no open position left unattended but what I told the brokerage is not good enough so far in dealing with this matter.

Common Mistakes Made in Continuing Power of Attorney

Here are some common mistakes made in continuing power of attorney done with standard forms.

Naming just one person as the attorney

It is important to have multiple alternative attorney appointed so that at least one person can handle your urgent matters for you.

No delegation power given to your attorney

Sometimes the attorney you have appointed may not be able to handle certain matters due to lack of expertise in the area. Giving your attorney the power to delegate and revoke someone as your attorney in specific issues allow you to have your matters resolved more quickly and efficiently.

Be specific on your intentions on specific matters

There are scenarios we can all relate to that we can state clearly how we like the issues handled.

For example, a common declaration nowadays is the do not resuscitate declaration. Do not resuscitate means that when you are in medical emergency and that you are unconscious already, you decline medical treatments that are designed to revive you when your heart or lungs already stopped functioning. Without such cause written in your power of attorney, some doctors may ignore your attorney who knows your intention due to pressure from your family members.

Another one is the handling of a brokerage account. By having the specific brokerage account for day trading stated in the continuing power of attorney and your intention to simply close out all open positions, it makes it much easier for your attorney to approach the brokerage without triggers days of legal negotiations.

Indemnification of the attorney

For some situation, your attorney may be making decisions on your behalf that at the end making your family or potential beneficiaries from your estate not happy. There could be other circumstances as well that can get your attorney into legal troubles, so giving your attorney indemnification can ensure them they will not be affected adversely. Many people, especially those who are not aware of you appointing them as your attorney, would decline the appointment due to the potential trouble they are getting into.

Grey Area Solution

One way to bypass all kinds of issues related to daily matters that have to be handled quickly is giving the attorney access to all the online account passwords so that the attorney can act on your behalf. This simplify the matters down to giving your attorney such information and explicitly giving your attorney this power in the continuing power of attorney. This means you have to maintain a list of the access information to all the important online accounts related to banking, brokerage and even email.

But some institutions have specific clauses that prohibit their clients from giving access to another person. This is where the grey area issue happens. Since your attorney is given the power to represent you and making decisions in place of you, legally they are acting as your attorney, not as another person, there should be no problem but we can never be sure. Your attorney has to be aware of this and willing to take on the risk should some company behind the online service choose to take legal actions.

Summary

As a summary, the continuing power of attorney is a short piece of legal document one can prepare and update very often. It is not that complex to maintain. Having things important to you clearly stated with your specific instructions in the continuing power of attorney can give you peace of mind that these matters are handled in a way you would like to.

Disclaimer

I am not a legal professional hence what I may have suggested here related to legal matters should not be taken as legal advice. I am just writing my experience and it may not be applicable to you even under similar circumstances. It is important you seek for proper legal advice from experienced lawyers.

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