Durable Power of Attorney
There is one estate planning document which every individual should have, regardless of age, financial status or family situation. It is the “Durable Power of Attorney” for financial matters.
The Durable Power of Attorney is a document which allows you to name another person (called the “Agent”), to act on your behalf regarding property and financial matters. The Agent can be your spouse, child, or other trusted family member or friend. It is important to select your Agent with care, and to name a back-up (or “successor” Agent) to act if the first named Agent is unable to do so.
The Durable Power of Attorney is important because it allows the Agent to manage your financial affairs if you become unable to do so, in the event of disability or incapacity. The document can also be used as a matter of convenience. For example, as an individual ages, he/she may have difficulty getting to the bank. An Agent under a Durable Power of Attorney would be able to handle all banking matters on your behalf, without being a named owner of the bank account in question (naming others as owners on your account can create significant risks to you if the other owner has creditors).
The authority granted to an Agent under a Durable Power of Attorney is usually quite broad, allowing the Agent to handle everyday matters, such as paying bills and depositing checks. The Agent can also carry out less routine tasks such as selling real estate or applying for public benefits. If you would like your Agent to have the authority to make gifts of your assets, your Durable Power of Attorney document must specifically grant that authority.
Without a Durable Power of Attorney, it may become necessary for a family member to go to Court and request to be appointed as a legal Guardian to handle your finances for you. Guardianship proceedings can be expensive and time consuming, as they usually involve filing fees, a formal hearing and detailed annual reports to be completed, with ongoing Court supervision. Given a choice, the vast majority of families prefer to deal with financial matters privately, with a family member appointed as Agent under a Durable Power of Attorney.
You can sign a Durable Power of Attorney at any time, as long as you are competent to sign a legal document. Once a person becomes incompetent, however, it is too late to sign a Durable Power of Attorney, and Guardianship may be the only option. Signing a Durable Power of Attorney now is a simple way for you to plan ahead in order to protect your family and your finances in the event of a crisis.
© Annis & Zellers, PLLC
This material is introductory and does not constitute legal advice. Please consult with your lawyer for estate planning services based upon your specific circumstances.