{"id":12212,"date":"2021-05-02T02:00:39","date_gmt":"2021-05-02T07:00:39","guid":{"rendered":"https:\/\/legaltalktexas.hammerle.com\/?p=12212"},"modified":"2025-06-18T17:02:25","modified_gmt":"2025-06-18T22:02:25","slug":"hot-powers-for-the-masses-a-useful-tool-that-should-be-used-carefully","status":"publish","type":"post","link":"https:\/\/hammerle.com\/legaltalk\/estate-planning\/hot-powers-for-the-masses-a-useful-tool-that-should-be-used-carefully\/","title":{"rendered":"Hot Powers For the Masses &#8211; A Useful Tool That Should Be Used Carefully"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">What powers are so incredibly dangerous that they were deliberately omitted from a state-wide form?\u00a0 \u201cHot powers\u201d, of course.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">When Texas developed a new statutory form for the <\/span><a href=\"https:\/\/hammerle.com\/legaltalk\/estate-planning-and-probate\/what-is-a-durable-power-of-attorney\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">durable power of attorney<\/span><\/a><span style=\"font-weight: 400;\">, it left out an entire section of powers that could be delegated to an agent. These are commonly known as the \u201chot powers.\u201d\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Hot powers were born in 2017 when Texas made its much-ballyhooed change to the durable power of attorney statutes. Texans are still coming to grip with the best way to use them.<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What Are Hot Powers?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Hot powers cover gifting, beneficiary designations, rights of survivorship, delegation of authority and living trusts. They are considered dangerous precisely because they are so sweeping. An agent who misuses a hot power could wreak havoc on your financial stability and <\/span><a href=\"https:\/\/hammerle.com\/practice-areas\/estate-planning-probate\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">estate plans<\/span><\/a><span style=\"font-weight: 400;\">.\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For that reason, hot powers are addressed separately in the statute. If you are using the basic statutory form, then you have to add each hot power individually and initial next to it. You also have to get past a paragraph that states \u201cCAUTION: Granting any of the following will give your agent the authority to take actions that could significantly reduce your property or change how your property is distributed at your death.\u201d\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">What Do Hot Powers Include?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">The basic description of each hot power is simple. It would be easy for you or your agent to be fooled about the scope of the power given.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For example, one hot power is described as \u201cCreate or change a <\/span><a href=\"https:\/\/hammerle.com\/legaltalk\/family-law\/marriage\/4-common-mistakes-beneficiary-designations\/\"><span style=\"font-weight: 400;\">beneficiary designation<\/span><\/a><span style=\"font-weight: 400;\">.\u201d Of course, you think, that power goes hand in hand with the general powers to handle insurance contracts and retirement benefits. Why is the hot power to change beneficiaries such a big deal?\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Because a hot power gives an agent even more authority regarding beneficiaries. An agent using a hot power could unilaterally name himself as a beneficiary, remove a beneficiary from a tax-advantaged plan to a less favorable investment, or re-configure how a non-probate asset will be distributed.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That gives your agent ample opportunity to create mischief, intentionally or unintentionally.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Another hot power is described as \u201cCreate, amend, revoke or terminate an inter vivos trust on behalf of the principal.\u201d An inter vivos trust is one that is created and effective during the lifetime of the principal. This power represents a huge change in Texas law, which previously held that an agent could not create a trust for the principal.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The other hot powers have their risks, too. Under the power to create a right of survivorship, an agent could change an account from a probate to a non-probate asset. The power to make gifts could be deemed a general power of appointment, which leads to all sorts of adverse tax ramifications. The power to delegate authority could mean that someone you do not like could end up acting as your agent.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">There is one statutory override on the hot powers \u2013 they all impose a duty on your agent to preserve your estate plan.\u00a0<\/span><\/p>\n<h2><span style=\"font-weight: 400;\">When are Hot Powers Useful?<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">With all of that danger, why would you ever want to use a hot power? Because sometimes they are necessary to give your agent flexibility to protect your interests in the event of a change in the law or a change in your circumstances or those of your beneficiaries and other agents.\u00a0\u00a0<\/span><\/p>\n<p><span style=\"font-weight: 400;\">And a hot power can be drafted with additional language that puts safeguards in place. You just need to <\/span><a href=\"https:\/\/hammerle.com\/lewisville-attorney\/#form\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">work with your attorney<\/span><\/a><span style=\"font-weight: 400;\"> to make sure your concerns are addressed in the document.<\/span><\/p>\n<p><a href=\"https:\/\/hammerle.com\/lawyers\/virginia-hammerle\/\"><i><span style=\"font-weight: 400;\">Virginia Hammerle<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> is an attorney with <\/span><\/i><a href=\"https:\/\/hammerle.com\/\"><i><span style=\"font-weight: 400;\">Hammerle Morris Law Firm<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> whose practice includes <\/span><\/i><a href=\"https:\/\/hammerle.com\/practice-areas\/estate-planning-probate\/probate\/\"><i><span style=\"font-weight: 400;\">probate law<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">, <\/span><\/i><a href=\"https:\/\/hammerle.com\/practice-areas\/estate-planning-probate\/estate-planning\/\"><i><span style=\"font-weight: 400;\">estate planning<\/span><\/i><\/a><i><span style=\"font-weight: 400;\"> and <\/span><\/i><a href=\"https:\/\/hammerle.com\/practice-areas\/estate-planning-probate\/estate-and-trust-litigation\/\"><i><span style=\"font-weight: 400;\">contested litigation<\/span><\/i><\/a><i><span style=\"font-weight: 400;\">.\u00a0 To receive her newsletter contact her at legaltalktexas@hammerle.com.\u00a0 <\/span><\/i><\/p>\n","protected":false},"excerpt":{"rendered":"<p>What powers are so incredibly dangerous that they were deliberately omitted from a state-wide form?\u00a0 \u201cHot powers\u201d, of course.\u00a0\u00a0 When Texas developed a new statutory form for the durable power of attorney, it left out an entire section of powers that could be delegated to an agent. These are commonly known as the \u201chot powers.\u201d\u00a0\u00a0 [&hellip;]<\/p>\n","protected":false},"author":5,"featured_media":12213,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_links_to":"","_links_to_target":""},"categories":[1224],"tags":[685],"class_list":{"0":"post-12212","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-estate-planning","8":"tag-estate-planning"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.6 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Hot Powers For the Masses - A Useful Tool That Should Be Used Carefully - Hammerle Morris Law Firm<\/title>\n<meta name=\"description\" content=\"Hot powers can be delegated to an agent to cover some estate planning responsibilities but should be used carefully to avoid wreaking havoc on your plans.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/hammerle.com\/legaltalk\/estate-planning\/hot-powers-for-the-masses-a-useful-tool-that-should-be-used-carefully\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Hot Powers For the Masses - A Useful Tool That Should Be Used Carefully - Hammerle Morris Law Firm\" \/>\n<meta property=\"og:description\" content=\"Hot powers can be delegated to an agent to cover some estate planning responsibilities but should be used carefully to avoid wreaking havoc on your plans.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/hammerle.com\/legaltalk\/estate-planning\/hot-powers-for-the-masses-a-useful-tool-that-should-be-used-carefully\/\" \/>\n<meta property=\"og:site_name\" content=\"Hammerle Morris Law Firm\" \/>\n<meta property=\"article:published_time\" content=\"2021-05-02T07:00:39+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2025-06-18T22:02:25+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/hammerle.com\/legaltalk\/wp-content\/uploads\/sites\/2\/2021\/04\/5.2-blog-final.png\" \/>\n\t<meta property=\"og:image:width\" content=\"800\" \/>\n\t<meta property=\"og:image:height\" content=\"500\" \/>\n\t<meta property=\"og:image:type\" content=\"image\/png\" \/>\n<meta name=\"author\" content=\"Virginia Hammerle\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Virginia Hammerle\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"3 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\\\/\\\/schema.org\",\"@graph\":[{\"@type\":\"Article\",\"@id\":\"https:\\\/\\\/hammerle.com\\\/legaltalk\\\/estate-planning\\\/hot-powers-for-the-masses-a-useful-tool-that-should-be-used-carefully\\\/#article\",\"isPartOf\":{\"@id\":\"https:\\\/\\\/hammerle.com\\\/legaltalk\\\/estate-planning\\\/hot-powers-for-the-masses-a-useful-tool-that-should-be-used-carefully\\\/\"},\"author\":{\"name\":\"Virginia Hammerle\",\"@id\":\"https:\\\/\\\/hammerle.com\\\/legaltalk\\\/#\\\/schema\\\/person\\\/3a35dce360aad1cd9da53574c3c1a6bd\"},\"headline\":\"Hot Powers For the Masses &#8211; 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