Planning for unfortunate events such as serious disease or injury is rarely on anyone's set of favorite pastimes. Sometimes, though, enduring the small discomfort which could accompany finding your way through the unexpected will avoid untold anguish on the part of your family and friends. This is certainly the case with the Durable Power of Attorney, an often simple document that becomes so essential if sickness or injury renders you struggling to take care of your own affairs.
Power of Attorney Defined
AN ELECTRICAL of Attorney is really a document in which you (because the "Principal") allow someone else (the "Agent" or "Attorney-in-fact") to act legally on your behalf. The Power of Attorney may be limited to very specific actions that the Agent is authorized to defend myself against your behalf. On the other hand it may supply the Agent very broad powers. In either event, the Agent you appoint in the energy of Attorney should be someone that you trust without reservation. That may be a member of family, an advisor, a trustworthy friend or perhaps a bank or similar institution.
The "Durable" Power of Attorney
The significance of experiencing a "Durable" Power of Attorney is best understood once you learn so what can happen with the plain old garden variety of Power of Attorney.
If you sign a Power of Attorney that is not "durable," the document remains effective only when you are alive and competent to handle your own affairs. In the event that you become incompetent or die, the Power of Attorney is automatically revoked by law and your Agent is not any longer in a position to act on your behalf. This prevents a Power of Attorney from becoming irrevocable inadvertently, and, until recent times, it was the only method a Power of Attorney could possibly be prepared.
The non-durable Power of Attorney has limited usefulness for family and estate planning purposes, though, as the Power of Attorney is frequently most needed when you have become incapacitated! Then you really need someone else that is able to make legal decisions or take other actions in your stead.
All fifty states now let the usage of a "durable" Power of Attorney that's not revoked simply because the Principal becomes incapacitated or mentally incompetent. This makes the Durable Power of Attorney a far more reliable document, particularly for family and estate planning purposes, since you may now authorize your Agent to act on your behalf even after illness, injury or other cause has rendered you unable to manage your own affairs. Despite having a Durable Power of Attorney, however, the Principal's death causes an immediate revocation of the document and termination of the powers which are given to the Agent.
A Matter of Convenience
The Durable Power of Attorney is often used as a matter of convenience.
Suppose, for instance, you have your house listed for sale. You have also planned a long awaited trip to visit Aunt Trixie in Deadwood, South Dakota, and you are concerned that an interested buyer will come along when you are on the highway. A Durable Power of Attorney would be handy here to appoint someone you trust to do something in your absence to negotiate the sale and sign any documents that are needed to make the deal binding.
The Durable Power of Attorney could possibly be prepared in order that it is effective only before date you plan to come back from your trip, also it might describe specific terms that your Agent must include in the sale, such as the minimum sale price that's acceptable to you.
A Matter of Protecting FAMILY MEMBERS
What goes on if, from illness, injury or another cause, you feel physically or mentally incapacitated to the stage that you are no longer able to handle your own legal affairs?
Let's suppose again that while you are incapacitated it is needed to mortgage your home to cover your medical bills. Who'll sign the mortgage? Even though your home is jointly owned with your spouse, he cannot get yourself a mortgage without your signature.
In those circumstances it would be necessary to request the neighborhood probate court to appoint a guardian for you personally that has the power to take care of your legal affairs. In many states, this kind of guardian is known as a "conservator". Included in the conservator's powers may be the power to borrow money and sign a home loan on your behalf to be able to obtain the funds needed to pay the medical bills.
However, you might have heard that it's beneficial to avoid probate whenever you can, particularly if there exists a good alternative available. The delay and expense connected with probate proceedings and the truth that they are conducted in the probate court, a public forum, make that advice in most circumstances. And there's a better alternative than probate, nonetheless it requires one to act before the incapacity arises - you need to sign a Durable Power of Attorney.
When used in this estate planning context, the Durable Power of Attorney is normally worded very broadly to provide your Agent the power to step into your legal shoes in nearly every circumstance. In place, you tell your Agent "That can be done anything I can do."
Now, for those who have prepared the Durable Power of Attorney and become incapacitated, nobody has to proceed through a probate proceeding to appoint a guardian or conservator to act for you personally - you have previously given your Agent the power to do so. As you can plainly see, the Durable Power of Attorney can save time and expense in critical situations and prevent having your personal affairs become the subject of a public proceeding.
Appointing a Successor Agent
It is often smart to appoint a number of successor Agents. The Agent you appoint in your Durable Power of Attorney may die or for a few other reason become unable or unwilling to act as your Agent. In that case, you could be left without you to definitely act for you when you most need that assistance.
Appointing successors to your first choice of Agent helps insure that someone is definitely available to handle your affairs. Needless to say, each successor that you appoint should be someone which has your complete trust.
Revoking an electrical of Attorney
As long as you are competent, you have the energy to revoke your Durable Power of Attorney. To do so, send written notice to your Agent notifying him or her that the document has been revoked. Once the Agent has notice of one's revocation, the Agent may take no further action beneath the Durable Power of Attorney. However, your revocation won't undo any permissible actions that the Agent has taken prior to being notified that the Power of Attorney has been terminated.
You need to also notify third parties with whom your Agent has been dealing that the Durable Power of Attorney has been revoked. For instance, if the Agent has been dealing with a stockbroker, you must notify the stockbroker as soon as possible. Do this in writing, as well, and take action immediately. Third parties who do not receive notice of the revocation have entitlement to, and probably will, continue to rely on the Durable Power of Attorney.
Making the Durable Power of Attorney Effective upon Incapacity.
It is possible to have a Durable Power of Attorney that only becomes effective if so when you become incapacitated. This document is referred as a "springing" Durable Power of Attorney since it "springs alive" on the occurrence of a future event - your incapacity. The document should include an in depth definition of "disability" to make clear the circumstances where your Agent may act on your behalf.
Understanding that your Agent is unable to exercise her or his powers until you are actually unable to do so yourself may make using the Durable Power of Attorney convenient for you. Unfortunately, even with an excellent definition of incapacity in the springing Durable Power of Attorney, your Agent may find that third parties are simply just not ready to make the judgment that you are indeed disabled. If they're wrong, they may be held prone to you for any damages that you sustain as a result of the error in judgment. You might therefore discover the springing document cannot be relied upon in all circumstances.
Don't Procrastinate!
Estate planning is easy to place off. But don't! Advance planning, such as executing a Durable Power of Attorney, could make a horrible circumstance for you and your family just a little more bearable.