Durable Powers of Attorney
A durable power of attorney is an essential part of a complete estate plan because it permits someone to handle your financial affairs when you become incapacitated. It appoints a person as an agent for you and authorizes that agent to step into your shoes to handle your financial affairs. Unlike the trustee of your trust, your financial agent does not take title to your property he or she simply has the authorization to handle those financial affairs that you permit. An important feature of the durable power of attorney is that it can be used to handle the affairs of an incompetent person without the necessity of a court appointed guardian.
A power of attorney becomes “durable” if it remains effective after you become incapacitated. Of course, the power can be revoked once the incapacity goes away.
Your durable power of attorney can be drafted narrowly or broadly so that you can limit your agent’s powers. For example, the power could authorize only one type of transaction such as banking or the power could extend to all financial transactions including buying and selling real property, tangible personal property stocks, bonds, and other investments. You can authorize your agent to operate your business, handle insurance claims, litigation claims, retirement claims and other governmental benefits such as social security and filing tax returns. You may give your agent the power to make gifts or undertake estate planning tasks by amending trusts or funding trusts.
You can give your agent the power immediately or give the power upon the occurrence of some future event such as your incapacity. Usually your incapacity is determined by your licensed physician.
You can revoke the power of attorney at any time by cancelling the document or by a later writing. A death revokes a power of attorney automatically whereas the power of a successor trustee continues after death.
It is a good idea to update a durable power of attorney every seven years or so because some institutions, such as a bank, may not recognize an aging durable power of attorney. Of course, you want to keep all institutions appraised of who your designated agent is for the durable power of attorney.
The future is always uncertain so it’s important to be protected in the event something occurs preventing you from handling your financial affairs, especially in our world where finances play such a large part of our lives. Call me today so we can put your affairs in order.