When people plan their estate, typically the legal documents they first think about are a Will, and perhaps a Trust. Another document that is equally important—perhaps even more important to have during a person’s lifetime—is a Durable Power of Attorney for financial, legal and personal business matters.
In a power of attorney you appoint and authorize an individual of your choice to act as your agent to handle specified matters in your name and on your behalf, the same as if you were physically present. A person may give his or her agent a “general” power of attorney to conduct any or all of their personal and legal affairs, or a “limited” power of attorney to handle only particular specified matters. A power of attorney is called “durable” if it includes language clarifying that your agent may still act for you even if you become disabled or incapacitated. However, once the person who gave the power of attorney dies, it is no longer effective and may no longer be used by the named agent.
In giving someone power of attorney, you do not give up the right to continue to handle all your financial, legal and personal business for yourself, to the extent you are able. You simply are authorizing someone else to act for you, in addition to whatever you can do for yourself.
Once signed, an appropriately worded power of attorney can be of benefit in a variety of situations:
- Avoids the expense and delays of a probate court conservatorship or protective order proceeding if you are unexpectedly disabled.
- Enables adult children of an elderly or disabled parent to do banking and pay the parent’s bills, without the attendant risks of adding the child to the accounts as a joint owner (i.e. garnishments by the child’s creditors, involvement in a child’s divorce, etc.)
- Allows the agent to complete the funding of assets into your living trust for probate avoidance purposes, even after you are incapacitated.
- Authorizes a trusted individual to complete the sale of your home after you move, or to conduct certain personal business if you are out of town on an extended trip.
- Allows parents to conduct financial or legal business for their college-age children while they are away at school.
- It is perhaps the most important and helpful document to have in place ahead of time to facilitate Medicaid planning, if you are unexpectedly incapacitated and require admission to a nursing home.