Dangers of using 'do-it-yourself' legal documents

06 November 2008

With the onslaught of do-it-yourself legal document promoters, we frequently are contacted by clients who have attempted to utilize such "Internet" legal documents and are either confused or have found themselves in real trouble as a result of the poorly drafted documents. Let's start with the topic of durable powers of attorney for both health care and property.

The three main problems with not seeking legal advice before signing the powers of attorney include:

1. The potential for errors in the completion of the forms.

2. Lost opportunities in editing of the forms.

3. Failure to obtain advice for those serving as agents.

When we review powers of attorney completed and signed without the benefit of legal advice, we invariably see errors ranging from the lack of a witness or a notary public to signing on the wrong designated lines. As discussed below, these documents are dauntingly powerful and require utmost care in drafting, completion and execution. All too often the documents are unenforceable because of these errors, and clients are forced to petition a court for guardianship of the disabled loved one.

Most people are not aware there are many opportunities to improve or customize powers of attorney when adopting them. For example, without adding express provisions to the contrary, the agent for the disabled principal is unable to make gifts to the principal's loved ones and is unable to amend trust documents or joint tenancies or beneficiary designations. As for the health care power of attorney, my clients often wish to edit the organ donation section so as to allow for transplantation to a living person but not necessarily for research.

Finally, the importance of these documents is often underestimated. When one is appointed as another's durable power of attorney, the one appointed - the agent - assumes the highest duty owed to another - the fiduciary duty. Few people realize that Illinois law requires the agent to keep detailed records of all receipts, disbursements, and any significant actions taken under the agency. The law holds the agent financially liable for any negligence in the agent's actions or failure to act. The burden of proof is always on the fiduciary to rebut the presumption by clear and convincing proof that the agent has exercised good faith. If an heir of the principal were to object to the agents' expenditure or gift or reimbursement to the agent, or to the agent's family, it will be the agent, not the heir who has the burden to show that the agent did not intend to defraud the principal.

In conclusion, so as to ensure the legal effect of the documents, to take advantage of the opportunities to customize and maximize the benefits of the powers of attorney and to understand the duties one must carefully follow, we strongly recommend that individuals never attempt to adopt powers of attorney for health care or property without seeking legal advice (other than perhaps for medical emergencies when required by a hospital).