When you are contemplating which estate planning tools to use, be sure to consider a durable power of attorney. This important tool allows someone else to take control over and manage your affairs in case you are ever incapacitated for any reason. It does not matter whether that incapacity is temporary or permanent. It is important to remember to specifically designate the power of attorney as “durable” so that it will remain in effect once you become incapacitated.
The purpose of a power of attorney
A general power of attorney is a legal document that essentially appoints someone to be your agent while providing that agent with broad authority over your affairs. Usually, a power of attorney is created to allow management of financial matters or health care decisions.
Examples of how a power of attorney works
If the power of attorney is limited in nature, then the agent will only have the authority established by the terms of the power of attorney document. With a power of attorney, for example, you can give your business partner authority over certain business assets. You can give an agent management power over your rental property if you have to go out of the country for an extended period of time. There are many options to fit your needs.
You can choose your own agent with a durable power of attorney
Unlike with a guardianship, establishing a durable power of attorney allows you to choose your own agent to handle your personal matters for you if the need arises. If you do not choose that person ahead of time and later become incapacitated, then a judge will be required to make that decision for you. For many people, the chance to make that decision for themselves is crucial.
How to select your agent
In choosing your agent, you need to consider the qualities of your friends and family to determine who would be most trustworthy when it comes to managing your personal affairs. Once you create a durable power of attorney, that person can begin making decisions for you as soon as necessary without the need for expensive and time-consuming court procedures. Without a durable power of attorney, the court will be required to appoint a guardian to manage your affairs. The court procedure required to appoint a guardian is more expensive than executing a durable power of attorney.
A durable power of attorney gives you the opportunity to plan ahead
One of the benefits of having a durable power of attorney in place is that you can have a chance to discuss your expectations with your family while you still have the opportunity. That chance can be invaluable. When you draft the terms of your durable power of attorney you can take into consideration how your needs may be different as you get older, such as the potential need for long-term care.
A durable power of attorney can minimize family disputes
Another great benefit of establishing a durable power of attorney is the possibility of avoiding confusion and uncertainty as to how you want your personal affairs to be managed. A properly drafted durable power of attorney can help you avoid the likely family disputes regarding your financial and healthcare matters. When a loved one has become incapacitated, the family should not be wasting time fighting over medical or financial decisions. Instead, someone should already be chosen to step up and take over when necessary. Planning ahead allows you and your family to avoid most of the common disputes.
Durable powers of attorney can also provide asset protection
What some people do not realize is that durable powers of attorney can also provide asset protection. The need for asset protection is extremely important when nursing home services are required. Without taking the proper steps before you need to be a nursing home resident, you may lose much of your assets in order to pay for nursing home care.
There are certain steps that need to be taken in order to appropriately shelter your assets. As long as your estate planning attorney drafts a suitable durable power of attorney with the right gifting provisions, then your assets will be protected.
Join us for a FREE workshop today! 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.