Planning for unfortunate events such as for example serious illness or injury is rarely on anyone's list of favorite pastimes. Sometimes, though, enduring the tiny discomfort that could accompany finding your way through the unexpected will avoid untold anguish on the part of your friends and relations. This is really the case with the Durable Power of Attorney, an often simple document that becomes so very important if sickness or injury renders you struggling to take care of your personal affairs.
Power of Attorney Defined
A Power of Attorney is a document in which you (as the "Principal") allow another person (the "Agent" or "Attorney-in-fact") to act legally on your behalf. The Power of Attorney may be limited to very specific actions that the Agent is authorized to take on your behalf. Alternatively it may give the Agent very broad powers. In either event, the Agent you appoint in the energy of Attorney ought to be someone that you trust without reservation. That could be a member of family, an advisor, a trustworthy friend or perhaps a bank or similar institution.
The "Durable" Power of Attorney
The significance of having a "Durable" Power of Attorney is best understood if you know what can happen with the plain old garden variety of Power of Attorney.
If you sign a Power of Attorney that's not "durable," the document remains effective only when you are alive and competent to take care of your own affairs. If you become incompetent or die, the energy of Attorney is automatically revoked by law and your Agent is no longer able to act on your behalf. This prevents an electrical of Attorney from becoming irrevocable inadvertently, and, until recent times, it was the only way a Power of Attorney could possibly be prepared.
The non-durable Power of Attorney has limited usefulness for family and estate planning purposes, though, because the Power of Attorney is frequently most needed when you have become incapacitated! That is when you really need someone else that is in a position to make legal decisions or take other actions on your behalf.
All fifty states now permit the use of a "durable" Power of Attorney that is not revoked simply because the Principal becomes incapacitated or mentally incompetent. This makes the Durable Power of Attorney an even more reliable document, particularly for family and estate planning purposes, since you may now authorize your Agent to do something on your behalf even with illness, injury or other cause has rendered you struggling to manage your own affairs. Even with a Durable Power of Attorney, however, the Principal's death causes an immediate revocation of the document and termination of the powers which are given to the Agent.
A Matter of Convenience
The Durable Power of Attorney is frequently used as a matter of convenience.
Suppose, for example, you have your home listed on the market. You have also planned a long awaited visit to visit Aunt Trixie in Deadwood, South Dakota, and you are concerned that an interested buyer may come along when you are on the road. A Durable Power of Attorney will be handy here to appoint someone you trust to do something in your absence to negotiate the sale and sign any documents that are needed to make the offer binding.
The Durable Power of Attorney could possibly be prepared so that it is effective only before date you plan to return from your trip, also it might describe specific terms that your Agent must use in the sale, including the minimum sale price that is acceptable to you.
A Matter of Protecting FAMILY MEMBERS
What happens if, from illness, injury or another cause, you feel physically or mentally incapacitated to the stage that you are no longer able to handle your personal legal affairs?
Let's suppose again that when you are incapacitated it becomes necessary to mortgage your house to cover your medical bills. Who'll sign the mortgage? Even if your property is jointly owned with your spouse, he cannot obtain a mortgage without your signature.
In those circumstances it could be necessary to request the local probate court to appoint a guardian for you personally that has the power to take care of your legal affairs. In many states, this sort of guardian is known as a "conservator". Contained in the conservator's powers may be the power to borrow funds and sign a mortgage on your behalf making it possible to obtain the funds needed to pay the medical bills.
However, you might have heard that it is advantageous to avoid probate whenever possible, particularly if there is a good alternative available. The delay and expense associated with probate proceedings and the truth that they're conducted in the probate court, a public forum, make that good advice in most circumstances. And there's a better alternative than probate, nonetheless it requires you to act before the incapacity arises - you have to sign a Durable Power of Attorney.
When found in this estate planning context, the Durable Power of Attorney is normally worded very broadly to provide your Agent the energy to step into your legal shoes in almost any circumstance. In place, you tell your Agent "That you can do anything I could do."
Now, for those who have prepared the Durable Power of Attorney and then become incapacitated, no one has to go through a probate proceeding to appoint a guardian or conservator to act for you - you have already given your Agent the energy to do so. As you can see, the Durable Power of Attorney can save time and expense in critical situations and steer clear of having your individual affairs end up being the subject of a public proceeding.
Appointing a Successor Agent
It is often a good idea to appoint a number of successor Agents. The Agent you appoint in your Durable Power of Attorney may die or for some other reason become unable or unwilling to act as your Agent. If so, you might be left without someone to act for you when you most need that assistance.
Appointing successors to your first selection of Agent helps insure that someone is definitely open to handle your affairs. Of course, each successor that you appoint should be someone that has your complete trust.
Revoking an electrical of Attorney
As long as you are competent, you have the power to revoke your Durable Power of Attorney. To do so, send written notice to your Agent notifying her or him that the document has been revoked. Once the Agent has notice of your revocation, the Agent might take no further action under the Durable Power of Attorney. However, your revocation won't undo any permissible actions that the Agent has had prior to being notified that the energy of Attorney has been terminated.
You must also notify third parties with whom your Agent has been dealing that the Durable Power of Attorney has been revoked. For example, if the Agent has been coping with a stockbroker, you need to notify the stockbroker as soon as possible. Do this in writing, as well, and take action immediately. Third parties who do not receive notice of the revocation have entitlement to, and probably will, continue to rely on the Durable Power of Attorney.
Making the Durable Power of Attorney Effective upon Incapacity.
It is possible to have a Durable Power of Attorney that only becomes effective if and when you become incapacitated. This document is referred as a "springing" Durable Power of Attorney since it "springs alive" on the occurrence of another event - your incapacity. The document should include an in depth definition of "disability" to create clear the circumstances in which your Agent may act on your behalf.
Knowing that your Agent struggles to exercise their powers until you are actually unable to do so yourself may make using the Durable Power of Attorney convenient for you. Unfortunately, even with an excellent definition of incapacity in the springing Durable Power of Attorney, your Agent may find that third parties are simply just not ready to make the judgment you are indeed disabled. If they are wrong, they may be held liable to you for just about any damages that you sustain due to the error in judgment. You may therefore find the springing document can't be relied upon in all circumstances.
Don't Procrastinate!
Estate planning is simple to put off. But don't! Advance planning, such as for example executing a Durable Power of Attorney, could make a horrible circumstance for you personally and your family just a little more bearable.