EDUCATION
Durable Power of Attorney
A power of attorney is a legal document that gives a person - such as a relative, lawyer, or friend - the authority to make legal, medical, or financial decisions for another person.
A durable power of attorney is one of the most powerful and important estate planning tools available to protect an individual’s financial welfare in the event they can’t make decisions on their own due to incapacity caused by factors such as age, illnesses such as Alzheimer’s or dementia, injury, accident, or for any other reason.
You can name a trusted individual called an “Agent” to step into your financial shoes and legally act on your behalf to help pay bills, make bank deposits, monitor investments, collect insurance and governmental benefits, and handle any other financial matters you may desire.
Why It Is Necessary
Why Do I Need a Durable Power of Attorney?
A durable power of attorney is essential because if a person becomes incapacitated for any reason without this document in place family and friends will not be allowed to pay bills or make many important financial decisions on behalf of their loved one. This can lead to loss of family control and increased costs by court intervention.
When to Create
When Do I Create My Durable Power of Attorney?
Smart estate planning requires preparing the durable power of attorney for finances now, before incapacity arises. At that point, you won’t be able to create a power of attorney because you won’t have the capacity to sign.
If you don’t execute a durable power of attorney while you still have “capacity,” court intervention would be necessary. This intervention is costly, usually stressful, and oftentimes against your wishes.
When Does It End?
Termination of Durable Power of Attorney
A durable power of attorney for finances ends upon death.
It can also end if:
You revoke or revise it, which you may do as long as you’re mentally competent;
The court invalidates the document because there is evidence that you were not mentally competent when you signed it; and/or
No agent is available. It’s wise to have at least one alternate agent named. You can also name co-agents if you desire.
Who Can Act as an Agent
Who Can Act As Your Agent?
Anyone can act as your agent for the durable power of attorney for finances. You can also name more than one agent, known as a “co-agent” to act together and/or separately. Co-agents provide the benefit of checks and balances, but it may not be the best option if you envision that your agents may disagree. In that event, you should choose a primary agent and alternate(s) in the event the primary cannot act.
Your agent is given the responsibility to handle your financial affairs. As such, your agent “steps into your financial shoes” and handles everything you give them the authority and power to handle. Clients often give their agents the full authority to act for them on all financial matters in the event of incapacity, which, like a trust, helps to avoid probate court intervention during life.
