When most people think about planning their estate, they wonder things like, “What is the difference between a will and a trust?” and, “Does a will avoid probate court?” We have explored these topics in detail on this site. However, many times people will forget about powers of attorney, which are an absolutely crucial part of estate planning.
WHAT IS A POWER OF ATTORNEY?
A power of attorney document gives someone else the power and authority, in writing, to carry out certain actions on your behalf. You could use a power of attorney to give someone else the power to do almost anything under the sun on your behalf. A “durable” power of attorney is a special type of power of attorney that is still valid and effective even after you become incapacitated. In order for a power of attorney to be “durable,” certain requirements must be met.
Whereas wills and trusts can control what happens to your assets if you pass away, durable powers of attorney can control what would happen to you and your assets if you were alive but incapacitated. This is typically done by creating a “durable power of attorney for health care decisions” and a “durable power of attorney for financial decisions.”
DURABLE POWER OF ATTORNEY FOR HEALTH CARE
A health care durable power of attorney usually states who could make your health care decisions if you were to become incapacitated (but still alive) and were unable to make your own decisions. A financial durable power of attorney, on the other hand, usually states both (1) who could make your financial decisions if you were alive but incapacitated, and (2) what type of decisions that person would be able to make in the event of your incapacity.
Many people go to their doctor and fill out some sort of boilerplate form regarding health care, which is certainly better than doing nothing at all. However, we have found that going over these documents with your attorney will usually result in a superior and more comprehensive discussion on the legalities of these topics.
DURABLE POWER OF ATTORNEY FOR FINANCES
In our experience, we have also found that the financial power of attorney document is the most under-utilized and overlooked legal document – period. A financial power of attorney is a crucial document, yet many people do not know what it is, don’t think they need it, or forget about it.
In addition, many married people believe that, because they are married, they can automatically make legal and/or financial decisions for their spouse. However, this is not often the case. If your spouse were to lose capacity, and you needed to sell real estate, how would you get their signature? Would you have the authority to sign their name to legal and financial documents? The answers here are almost always “no,” unless you have a financial power of attorney.
Unfortunately, if you don’t have a durable power of attorney for finances, the alternative is to file for guardianship and/or conservatorship over your own spouse. This means you will have to publicly allege that your spouse is incompetent and cannot handle his or her own affairs. Then, you will need to prove that you are the best person to handle those affairs. Often, a simple financial durable power of attorney could have allowed you to avoid all of this.
DON’T WAIT UNTIL IT IS TOO LATE
Unfortunately, once a person is incapacitated or incompetent, it is too late to have them sign any powers of attorney, wills, trusts, or other legal documents. So it is crucial that this planning is completed during a person’s lifetime, while they still have the capacity to make such decisions.
At Affordable Legal Services, we draft durable powers of attorney for people who want to prevent a probate court from making decisions involving the lives of their family members. We use powers of attorney as simple and cost-effective alternatives to formal guardianships and conservatorships. In any case, the important message is that powers of attorney are essential estate planning tools that no one should be without.
Make your wishes known and find peace of mind in the process as well. Talk to an experienced attorney about your legal needs today. To do that, simply call our offices directly, email us, or use the box on the right-hand side of this page to send us a message.