Durable Power of Attorney
A durable power of attorney is one of the most important estate planning documents you can have. It allows you to appoint someone to act for you (your “agent” or “attorney-in-fact”) if you become incapacitated. Without a power of attorney, your loved ones would not be able to make decisions for you or manage your finances without asking the court to appoint a guardian, which is an expensive and time-consuming process.
There are many do-it-yourself power of attorney forms available; however, it is a good idea to have our attorneys draft the form for you. There are many issues to consider and one size does not fit all.
The agent’s powers
The power of attorney document sets out the agent’s powers. Powers given to an agent typically include buying or selling property, managing a business, paying debts, investing money, engaging in legal proceedings, borrowing money, cashing checks, and collecting debts. Some powers will not be included unless they are specifically mentioned. This includes, but is not limited to, the power to make gifts and the power to designate beneficiaries of your insurance policies.
The power to make gifts of your money and property is a particularly important power. If you want to ensure your agent has the authority to do Medicaid or estate planning on your behalf then the power of attorney must give the agent the power to modify trusts and make gifts. The wording in a power of attorney can be significant, so it is necessary to consult with our attorneys.
Springing or immediate
The power of attorney can take affect immediately or it can become effective only once your are disabled, called a “springing” power of attorney. While a springing power seems like a good idea, it can cause delays and extra expense because incapacity will need to be determined. If the power of attorney is springing, it is very important that the method for determining incapacity is clearly spelled out in the document.
While it is possible to name more than one person as your agent, this can lead to confusion. If you do have more than one person named, you need to be clear whether both parties need to act together or whether they can act independently. It might make more sense and be less confusing to name an alternative agent to act in case the first agent is unable to.
Executing the power of attorney
To be valid, a power of attorney must be notarized.
Accepting a power of attorney
Even if you do everything exactly right, some banks and other institutions are reluctant to accept a power of attorney. These institutions are afraid of a lawsuit if the power of attorney is no longer valid. Many banks or other financial institutions have their own standard power of attorney forms. To avoid problems, you many want to execute the forms offered by the institutions with which you have accounts. According to a MarketWatch.com article, you need to be careful that you don’t sign a bank’s document that inadvertently restricts a power of attorney’s ability to deal with other assets, and you should check that any document you sign with a bank match the original power of attorney. We would be pleased to review with you all your powers of attorney to make sure that there are no conflicts.