A power of attorney is one of the basic planning tools used in estate planning. A durable power of attorney allows you to select a trusted individual to take over and manage your affairs in the event you become incapacitated for any reason. This is true regardless of whether your incapacity is temporary or permanent. However, the power of attorney must be designated as “durable,” if you want it to remain effective even after you become incapacitated.
What is a power of attorney and how does it work?
When you create a general power of attorney, you are providing your agent with broad authority over your medical and or financial affairs. If your power of attorney is limited, on the other hand, then your agent’s authority will be limited to specific matters, as spelled out in the power of attorney document. For instance, you can create a power of attorney for your business partner, giving her access to particular assets only for the benefit of the business, in case you become incapacitated. You could also give your agent the power to manage your rental property temporarily while you are out of the country. Powers of attorney have many benefits. Here are 4 primary advantages of a durable power of attorney.
No. 1 A durable power of attorney allows you to choose your agent
It may seem pretty basic, but there is a great advantage to being able to choose an agent to handle things on your behalf. If you do not appoint that person now, and you later become incapacitated, a judge will make that determination for you. For most clients, the ability to make that decision themselves is very important. You can consider the attributes of the people around you and determine who you would trust most to step into your shoes if you need them. Once you execute the durable power of attorney, that person can start making decisions for you as soon as you need them, without the need for an expensive and lengthy court proceeding. Without a power of attorney, a court will likely need to appoint a conservator to handle your affairs. That process is much more expensive than simply executing a durable power of attorney.
No. 2. You have the opportunity to discuss your wishes with your agent ahead of time
Creating a durable power of attorney, as opposed to being appointed a conservator, gives you the chance to discuss your needs and expectations with your family while you still can, and that can be invaluable. In considering the nature of your power of attorney, you should reflect on how your needs are likely to change as you get older. By making your durable power of attorney comprehensive, you can address all of those issues when you have the document drafted. For instance, whether you need long-term care or government benefits are important considerations to make.
No. 3. You can avoid conflict and family disputes
Yet another benefit of having a durable power of attorney is the chance to avoid the confusion and ambiguity regarding how your affairs should be handled upon your death. A well-drafted power of attorney can do away with the inevitable disputes between family members regarding how your financial and healthcare needs should be handled. When a loved one becomes legally incompetent, their relatives should not spend their time fighting over how their medical treatment or finances should be handled. Instead, there should be someone ready and willing to step in and make the necessary decisions. If you plan ahead, with the assistance of durable power of attorney, you can avoid most of those disputes.
No. 4. Durable powers of attorney can provide asset protection
Durable powers of attorney are also great at providing protection for assets. This becomes most important when an individual enters a nursing home. If that person did not take steps to protect their assets before becoming a resident in a nursing home, those assets could be taken to pay for the nursing home care. There are certain steps that must be taken in order to properly shelter your assets, even when using a durable power of attorney. However, if your estate planning attorney drafts the appropriate durable power of attorney with gifting provisions, then asset protection can be accomplished.
Join us for a free seminar! If you have questions regarding a durable power of attorney, or any other estate planning needs, please contact the Schomer Law Group for a consultation, either online or by calling us at (310) 337-7696.