There is a very significant difference between a Power of Attorney and a Durable Power of Attorney. A Power of Attorney allows an agent to act for another (the principal) during the time that the principal has capacity. This is generally for a short duration of time (to sell a house while the principal is away or complete some other transaction). However, if the principal was to become incapacitated for some reason then the Power of Attorney would terminate immediately upon the happening of the incapacity and the agent would have no further power.
A “Durable” Power of Attorney allows an agent to act for the principal AFTER the principal becomes incapacitated, which is often times exactly when the principal needs the agent to act.
A Durable Power of Attorney for Assets is where you give an agent the power to handle financial matters for you (which are not Trust matters) if you become unable to do so yourself. For example, a Durable Power of Attorney authorizes your agent (also called your “attorney-in-fact”), to file your income tax returns or make decisions relating to retirement plans and insurance policies, or gain access to a safe deposit box if you become unable to handle these affairs for yourself.
The Durable Power of Attorney for Health Care (also called Advanced Health Care Directive) is where you give your agent the right to make medical decisions on your behalf if you become unable to make such decisions for yourself. You give written direction in your document regarding your intention on such issues as life support, the administration of nutrition and hydration as well as the donation of body parts or organs. It may also allow your agent to consent to or refuse surgeries, hospitalization or in-home care . You should discuss this important matter with your agent and your doctor so they will feel comfortable in carrying out your wishes.
How many people do you know who have suffered a debilitating stroke, debilitating disease, such as Parkinson’s, or some form of dementia that has rendered the person incapable of making informed decisions? You probably know several people and some may have been your parents or close friends. Should you at some point in your life become unable to make a decision for yourself, someone is going to have to make a financial and/or medical decisions for you. If you have not legally named agents (family member, friend, or professional) to act for you pursuant to your written direction, then someone will have to be appointed for you. That someone will be appointed by the court in a conservatorship proceeding and become the Conservator over your assets and/or over your person. A judge, who does not know you at all, will be forced to legally make the appointment of a conservator for you based on a court petition and reports from a court appointed family investigator. As you are probably gleaning, this court process is rather involved and lengthy, as well as costly. Further, once a conservator is appointed, the conservator will have to report to court periodically on what has transpired since the last court hearing. Thus, this process goes on and on until you either regain your capacity or die.
Having Durable Powers of Attorney (for Assets and Health Care) professionally drafted for you, which include many contingencies that are not included in many standard documents, should keep you out of court. The good news is, they’re relatively easy to implement.
Yes! As like all estate planning documents, we recommend that they be revisited every five (5) years. This allows you to reevaluate your personal and financial situation, proper agent designations, and keep up with the current laws.
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