A durable power of attorney is an extremely important estate planning tool, even more important than a will in many cases. This crucial document allows a person you appoint – your “attorney-in-fact” or “agent” – to act in place of you – the “principal” – for specific purposes when and if you ever become incapacitated due to dementia or some other reason.
The agent under the power of attorney can then quickly step in and take care of your affairs. This may include health care-related or financial decisions, depending on the power of attorney document you create.
However, to execute a power of attorney (POA) and name an agent to stand in your shoes, you need to have capacity. Regrettably, many people delay completing this vital estate planning step until it’s too late and they no longer are legally capable of doing it.
Life can take some unexpected turns. If you ever experience a serious illness or sudden injury, you may lose the ability to handle your own affairs. You want someone you trust to have the legal authority to act on your behalf and in your best interests if necessary.
Without a durable power of attorney, no one would be able to represent you unless a court appoints a conservator or guardian. That court process takes time and costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, the representative may have to seek court permission to take planning steps that they could have been implemented immediately under a simple durable power of attorney.
This is why it’s so important that you have a durable power of attorney in place before you lose the capacity to execute this type of document.
The standard of capacity with respect to durable powers of attorney varies from jurisdiction to jurisdiction. Some courts and practitioners argue that this threshold can be quite low: The client need only know that they trust the agent to manage their affairs. Others argue that since the agent generally has the right to enter into contracts on behalf of the principal, the principal should have the capacity to enter into contracts as well, and the threshold for entering into contracts is fairly high.
A third party, often an estate planning attorney, assesses this unless there is doubt about capacity. Formal legal requirements also must be followed.
If you do not have someone you trust to appoint as your agent, it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship. In that case, you may execute a limited durable power of attorney that simply nominates the person you want to serve as your conservator or guardian. (Note that different states may use the terms guardian or conservator to mean different things.)
A limited durable power of attorney grants authority to an agent to act on your behalf for very specific purposes only. This type of POA can be used to nominate a person you want to serve as your conservator or guardian should that ever be needed. It is different from a general durable power of attorney, which gives much broader powers to the appointed agent.
Most states require the court to respect your nomination “except for good cause or disqualification.”
Because you need a third party to assess your capacity and you also need to follow formal legal requirements, preparing and executing legal documents on your own without representation by an attorney can be risky. To execute a durable power of attorney before it’s too late, contact an experienced estate planning attorney in your area today.
Beyond being able to create a durable power of attorney for you, an estate planning attorney can provide comprehensive support in many other ways, including the following:
Engaging an estate planning attorney can help give you peace of mind, navigating intricate legalities and ensuring that your wishes are upheld.
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Estate planning involves various legal instruments, such as wills, trusts, powers of attorney, and healthcare directives. We specialize in estate planning, ensuring that your documents comply with the ever-changing state and federal laws. We can help you navigate intricate legal requirements, minimizing the risk of costly errors and potential disputes.
Every person's financial situation and family dynamics are unique. We will take the time to understand your goals and circumstances, allowing for the creation an estate plan that suits your individual situation.
We can assist you in structuring your estate plan to protect your assets from potential creditors, lawsuits, and taxation. Our experience can also help you employ strategies to minimize tax liabilities.
Probate is the legal process through which a deceased person's assets are distributed. It can be time-consuming and costly. We can help you explore options to minimize or avoid the probate process, allowing your beneficiaries to receive their inheritances more quickly and efficiently.
When estate plans are unclear or disputed, it can lead to conflicts and legal battles. We can help you draft clear and legally sound documents that minimize the chances of disputes among heirs and beneficiaries. In the event that a dispute arises, we can also represent your interests and work toward an amicable resolution.
Estate plans need to be reviewed and updated periodically to reflect changes in your financial situation, family dynamics, and applicable laws. We can provide ongoing support and guidance, ensuring that your estate plan remains current and effective.
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