Not having a power of attorney in place may cause major headaches for property owners and their beneficiaries. Whether you are elderly, have a debilitating accident in the future, or just travel extensively, you’ll want to be sure that if you are unable to make important financial decisions about your home, that you’ll have a trusted family member or friend who can act on your behalf and in your best interests.
What is a Power of Attorney?
A power of attorney is a legal document that allows an individual, (the “principal”) to designate another person (the “attorney-in-fact”) to act on their behalf, should they become incapacitated or otherwise unable to manage their legal affairs. Having a power of attorney in place can protect your investment in the event you’re unable to act on your own behalf in the future.
Since a home is typically one’s greatest asset, I always recommend that my clients consult with an attorney who is knowledgeable about Hawaii real estate law to learn more about the legal options available to them to protect their investments, including updating or creating their wills, trusts or power of attorneys.
Does it matter who I use to draft my power of attorney?
If your power of attorney will address real property in Hawaii, it’s especially important to consult with an attorney who is familiar with Hawaii's real estate law and Land Court proceedings (Hawaii has two real estate recording systems: Regular System and Land Court).
What happens when Land Court isn’t properly addressed in a trust or power of attorney?
If the power of attorney is not properly drafted, the attorney-in-fact could possibly face not having the legal authority to sell, mortgage or transfer the property—which could cause a lot of frustration and unease for any family.
I recently assisted a couple with the sale of their Hawaii property, which was complicated by three factors:
- The couple lives on the Mainland.
- The husband was seriously ill, and wasn’t able to sign any legal documents.
- They held their Hawaii property in a revocable living trust with mutual powers of attorney.
The catch? The husband’s power of attorney was not written in a way that met with Hawaii Land Court approval. I referred them to an attorney knowledgeable of Hawaii real estate who drafted what’s known as a “specific power of attorney” that addressed only the sale of the designated property and gave the wife the ability to sign on his behalf. This format was acceptable by Land Court, and the sale went through. My client was so grateful for our assistance in navigating this tricky sale!
What should I keep in mind when creating a power of attorney?
If you are considering creating a power of attorney that addresses real property in Hawaii, keep these important tips in mind:
- Always consult with an attorney who is knowledgeable about Hawaii Land Court.
- Ask if you can get more than one “original” copy from your attorney. It may cost more, but Land Court requires original documents for recording, and they will keep the original until the legal process is completed. Currently, Land Court is taking on average one to two years to complete the recording process--if the power of attorney addresses other items, you will not want to have to wait for Land Court to return your original documents to you.
- If the power of attorney addresses items other than real property, you might consider creating a separate power of attorney to address only the property (this way, you won’t have to worry about how long Land Court will keep your original document).
- When there are multiple people on a trust (siblings, for example), a power of attorney can be created to grant one person the authority to make decisions, allowing the other trustees to not have to be physically present. This can be created before or after death of the principal.
The bottom line
My best advice: Don’t wait until it’s too late to get your legal affairs in order. If you’ve recently purchased real property in Hawaii, consult with attorney who understands Hawaii Land Court law to review your will, trust and/or power of attorney. If you don’t have a trusted, knowledgable attorney, your REALTOR® can make recommendations.