A power of attorney lets you appoint someone you trust to manage your financial or medical affairs should you be unable or unavailable to handle your own affairs.
Durable Power of Attorney (Financial)
Whenever you discuss your estate plan or your Will with your attorney, you should be sure that you discuss the preparation of a Durable Power of Attorney. In general, a Power of Attorney is a document that allows someone to act on your behalf when you are not present. For example, it is common in real estate transactions to use a Power of Attorney. You may have already moved to your new location, perhaps a different state, before settlement on your home takes place. The use of a Power of Attorney would allow you to appoint a third party, such as your real estate broker or your lawyer, to handle the real estate settlement for you. This would eliminate the need for you to fly back for a settlement.
The person you designate could appear for you at the settlement table, could sign the settlement sheets, and could arrange to wire transfer the proceeds of the sale directly to your bank account, all without your having to be present.
One immediate difference between a Durable Power of Attorney vs. Power of Attorney is that a Durable Power of Attorney is effective immediately and continues (and in most cases is never even used until) after you become disabled and have lost the ability to manage your own affairs. Ordinarily, a Power of Attorney would automatically be revoked should you later become disabled or lose the ability to revoke or recall the Power of Attorney; however, a Durable POA contains language that specifically exempts it from this requirement. A Durable Power of Attorney is designed to deal specifically with the situation where you are unable to handle your affairs. Therefore, it becomes most important should illness, the ravages of age, or a devastating accident deprive you of the ability to act on your own behalf.
However, illness and incapacity are not the only situations where a Durable POA is useful. For instance, should you lose your passport while traveling abroad, a Durable POA will allow your agent to deal with the appropriate agencies to obtain replacement identification papers for you. Or, you may simply be too busy to handle the never-ending pile of mail at home. Your agent under your Durable POA is authorized to handle this task for you, should you so choose.
A Durable Power of Attorney does not transfer assets to your agent or attorney-in-fact, but allows that person to act for you in most circumstances. The alternative is the appointment by the Court of the County in which you live of a guardian to act for you. Should you choose to rely on the procedure for appointment of a guardian, you may be putting your family through an expensive process that would take a considerable time to accomplish. In the meantime, bills can go unpaid, it can be impossible to sell a house or a car, and it can lead to major disruption for you and your family.
Many people believe that if they have a spouse, they don’t need a POA. Unfortunately, this is not the case. Your spouse cannot handle assets in your name alone. This misconception can lead to expensive guardianship proceedings as stated above.
A Durable Power of Attorney, together with your Will, and perhaps a Living Will or Healthcare Power of Attorney, are documents that you should discuss with your attorney when you are planning for your future.
Watch our video about a Financial Power of Attorney.
Health Care Power of Attorney
A Health Care Power of Attorney gives your agent the ability to obtain medical records for you, assist you in making health care decisions, and speak with your health care providers. If you are unable to understand, make or communicate a health care decision, this document gives your agent the authority to do so for you.
Watch our video about a Healthcare Power of Attorney.