In addition to wills and trusts prepared for a smart estate plan, most clients consider with us whether to prepare and execute powers of attorney to plan for managing their financial affairs and health care needs during their lifetimes as well.
A “power of attorney” is the right you give by law to someone else to do something for you that you otherwise would be the only person allowed to do. Your “attorney-in-fact” or “agent,” as they are sometimes called, can then do these things within the written scope of the authority that you have given them.
Two commonly prepared powers of attorney are for financial matters and for health care. A financial power of attorney can authorize someone for you to open accounts, cash checks, sign contracts or sell real estate, prepare taxes, and so on. It should only be given to someone you trust, most often a spouse or reliable child or sibling. The financial agent is required to act as your fiduciary on your behalf with your assets.
A general power of attorney for finances gives broad powers for a non-specific period of time or until it is revoked. A limited power of attorney can be created to allow the agent to do only very specific things or for a specified period of time. Our office can prepare either for you, with the limited power being one that you would probably prepare for a contemplated transaction that would require you to be there like a real estate closing that occurs while you’ll be on vacation.
A Power of Attorney for Health Care allows someone to make medical decisions for you if you become unable to do so for yourself either permanently or for a limited period of time. The health care power allows your agent to make elective decisions for you, including if you so direct, end of life decisions to end or not start extraordinary life sustaining treatments in consultation with your doctors if you will remain permanently unconscious.
|“Powers of attorney give you, not the probate court, the say as to what will and will not be done for you and who’ll make that choice.”|
These general powers of attorney for finances and for health care are called “durable powers,” which means very importantly that they survive your becoming incapable of making decisions for yourself. Without a durable power, your becoming incompetent would otherwise end the authority of the person to make financial or medical decisions for you, in which event someone would have to go to the probate court to prove that you were incompetent before managing your finances or making medical decisions for you. A durable power is therefore the estate planning mechanism of choice to avoid an expensive incompetency probate proceeding during your lifetime. Durable powers of attorney are always revocable by you during your competency should you choose to revoke it. You can name different agents should someone you selected no longer be your choice to make those decisions. Your agent needs to sign an acknowledgement of his or her responsibilities before beginning to act as your agent.
The cost of these documents is low considering the expenses and difficulties they can avoid down the road. Waiting until you are incapacitated is too late, because at that point the law considers that you are incapable of making those choices for yourself. At that point, only a probate court can then declare you incompetent and appoint someone to make financial or health care decisions for you. By making these elections now while you are competent, you choose the people to make the decisions for you, and you choose what kind of decisions you do or do not want made for you. In an incompetency proceeding, the court has to make those decisions for you, with expensive presentations of doctors, friends, and relatives to establish what it is that you would have wanted.
To start preparations of your advance directives, begin by preparing our Estate Planning Questionnaire. When you contact us about your estate plan, we will discuss with you any questions about these powers of attorney you may have so you can decide if they are right for you. If you go forward with one or both such powers, we’ll execute them along with your last will and testament or any trusts we also prepare for your estate plan. By making those documents through our office, you’ll know that all your elections are properly made, and the document is witnessed and kept safely for you.