A durable power of attorney can be used in estate planning in order to choose someone to take over and manage your affairs in the event you become incapacitated for some reason. Regardless of whether your incapacity is permanent or merely temporary, a power of attorney can work for you. However, the power of attorney must be designated as “durable,” if you want it to remain in effect after you are determined to be incapacitated.
What is a power of attorney?
A general power of attorney appoints an agent and then provides that agent with wide-ranging authority over your affairs. The most common type of authority is over health care and finances. On the other hand, if your power of attorney is limited, then your agent’s authority will be limited to only the specific matters, as indicated in the power of attorney document.
How does a power of attorney work?
You can create a power of attorney for your business partner, for example, giving him access to certain assets only for the benefit of the business, in the event you become incapacitated. You could also give your agent the power to manage your rental property while you are out of the country. Powers of attorney have many advantages.
#1. A durable power of attorney allows you to select your agent
It may seem pretty simple, but there is a big plus in being able to choose an agent to handle your personal matters on your behalf. If you do not select that person now, and you later become incapacitated, a judge will make that decision for you. For most clients, the opportunity to make that decision themselves is very important.
In selecting an agent, you should consider the attributes of your friends and family, and determine whom you would trust most to manage your personal affairs when the time comes. Once you create a durable power of attorney, that person can start making decisions for you as soon as you want them to, without the need for an expensive and time-consuming court proceeding. Without a power of attorney, the court will likely need to appoint a guardian to handle your affairs. The process of appointing a guardian is much more expensive than simply executing a durable power of attorney.
#2. You can discuss your wishes and intentions with your agent now
If you create a durable power of attorney, you will have the opportunity to discuss your desires and expectations with your family while you still can, and that can be invaluable. When drafting the terms of the power of attorney, you should consider how your needs are likely to change as you get older. If you create a comprehensive durable power of attorney, you can address any necessary issues. For example, you should consider whether you may need long-term care or government benefits in the future.
#3. A durable power of attorney can help you avoid family disputes
Another major benefit of creating a durable power of attorney is the ability to do away with confusion and ambiguity as to how your personal affairs should be handled. A well-drafted durable power of attorney can help you avoid the frequent family disputes as to how your financial and healthcare matters should be handled.
The reality is, when a loved one becomes legally incompetent, their family should not be wasting their time fighting over decisions regarding medical treatment or finances. Instead, there should already be someone who will step in and make the necessary decisions. If you plan ahead by using a durable power of attorney, you can avoid most of those disputes.
#4. Durable powers of attorney can provide asset protection
A durable power of attorney is also great at providing asset protection. Asset protection becomes even more important when the need arises for nursing home services. If you do not take the proper steps to protect your assets before becoming a resident in a nursing home, your property could be taken in order to pay for the nursing home services.
There are specific steps that must be taken in order to properly shelter your assets, even if you are using a durable power of attorney. However, if your estate planning attorney drafts a suitable durable power of attorney, including gifting provisions, then asset protection can be accomplished.
If you have questions regarding a durable power of attorney, or any other estate planning matters, contact Gaughan & Connealy for a consultation either online or by calling us at (913) 262-2000.