Durable Powers of Attorney
One of your most important Life & Estate Planning tools is the Durable Power Of Attorney. This is a written authorization, granting your chosen “Agent” (also called your “Attorney in Fact”) the legal power to act for you (you are called the “Principal.”) It is similar to hiring an employee to do a job for you, however an “Attorney-in-Fact” is usually an unpaid relative or friend (although it could be a paid professional such as your lawyer, accountant, or financial advisor). A power of attorney is “durable” when it is written so that it remains in effect even if you are incapacitated and cannot act for yourself.
With the Power of Attorney, your Agent can take care of all of your financial and legal affairs. He or she can pay your bills, put money in the bank, take it out, sell your real estate (if that’s the right thing to do) and sign documents (such as your income-tax return) in your name. You are putting significant trust in your chosen Agent, so you must ensure that your Agent will live up to the task. If you choose the wrong person, her or she can do a lot of damage to your financial affairs, so you must choose wisely.
If you become incapacitated without a Durable Power of Attorney in place, your family will have to go to court to have a Guardian named who would then have the power to handle your affairs. The delay caused by this could create problems, and the additional costs can be burdensome. With a Power of Attorney, you share your rights and powers with an agent. In a guardianship, you lose your rights and powers to the guardian. A ward under guardianship is like a minor child, with only limited rights of his own.
A well drafted Durable Power of Attorney will grant all of the necessary powers to your Agent to do whatever is required to take care of you and your legal and financial affairs. You can get form documents at an office supply store, or a standard form from an Attorney, but you should really get a document that is personalized to your particular needs.
There are many optional powers you can grant to your Agent that may be beneficial in your particular situation. You might need your Agent to be able to run your business, deal with rental real estate or be able to change the names on your bank accounts. You might want your Agent to be able to make gifts on your behalf or take care of a loved-one with your funds. You may also want to limit your Agent’s powers in some ways, or grant a third party the authority to oversee your Agent. All of these particular powers and options need to be discussed and written in to your document. You must consult with a competent professional and get a document tailored to your specific situation and needs. Your Durable Power of Attorney is one of your most essential planning tools and needs to be made just for you.