Every adult, regardless of their age, should have a durable power of attorney in place, according to a recent article titled “Essential documents: Do you have durable power of attorney” from The News Enterprise.’’
The durable power of attorney, sometimes referred to as a financial power of attorney or business power of attorney, is the second of three essential estate planning documents. The POA gives you the ability to name an agent to handle financial and legal matters on your behalf.
The durable power of attorney lasts until the principal (the person creating the POA) revokes the document or dies. Because the durable power of attorney expires on death, it is a document used only during a person’s lifetime and does not take the place of a last will and testament.
When creating a durable power of attorney, you can choose whether to make the document effective immediately or only upon your incapacity. Most married couples make their durable power of attorney document effective immediately for each other.
For successor agents, the person who will act as an agent if the spouse is unable to do so, couples often make the document “springing,” so the successor agent can only act if the principal is found to be incapacitated.
When should a POA be springing and when should it be durable? This may depend upon the age of children and whether the principal is able to continue managing their own finances.
Many single seniors make an adult child, or children, immediate agents, so they may handle financial and legal matters if they should become overwhelming for the senior. Other seniors prefer to retain control over their affairs and execute a springing power of attorney as a means of preventing the need for guardianship at any time in the future.
Any general power of attorney should include an agent and a successor as well as any specific provisions required pursuant to state law.
Any change of agent needs to be carefully considered, since this person has full access to finances and may make legal decisions. The agent is a fiduciary and is legally responsible for managing the person’s estate and for keeping careful records of any actions taken on behalf of the principal. If money is mismanaged, the agent can be personally liable for the mismanagement.
Power of attorney documents should include provisions specific to each person’s situation. They may include handling a person’s finances and any legal matters, the ability to convey real estate and apply for benefits, if necessary. Although some provisions may seem overly broad or not necessary, without specific provisions, the agent might not be able to protect the person if their hands are tied.
Whether a person needs a little help or needs their agent to take over managing everything, the durable power of attorney is a valuable part of protecting an individual from the unexpected events of life.
Reference: The News-Enterprise (Jan. 14, 2023) “Essential documents: Do you have durable power of attorney”