Powers of Attorney and Durable Powers of Attorney are legal documents that can be useful tools in a variety of legal, financial, business, and medical situations. They are relatively simple to create and can save a lot of headaches down the road!
The effect of a Power of Attorney is that one person (the principal) chooses another (the agent or attorney in fact) to serve as their representative in financial and business matters. Despite the name of the power, your attorney-in-fact does not have to be an attorney! You can determine whether you want to grant general powers to your agent, or only limited powers. Some possibilities for what powers you can grant using a Power of Attorney:
- buy, sell, maintain and pay taxes/mortgage on your real estate and other property
- handle bank transactions
- file and pay taxes
- claim property you are entitled to inherit
- invest money
- use your assets to pay your living expenses and those of your family
Some powers, like the power to marry; the ability to form, change or revoke a will; the right to vote; and others are not permitted to be delegated through a power of attorney. You retain the power to revoke the Power of Attorney at any time.
An ordinary Power of Attorney enables a designated person to make decisions for you, conduct business, and perform certain acts specified by you. However, an ordinary power of attorney automatically ends if a person becomes incapacitated or otherwise incompetent. If you want to plan for possible incapacitation in the future, whether it be mental, physical, or otherwise, you may want to execute a Durable Power of Attorney. This document stays in place even if you become unable to make decisions for yourself.
A major benefit of planning with a Durable Power of Attorney is that you are in charge of selecting who will have the power to make decisions for you. Whereas, without this easy to execute document, a court-appointed conservatorship or guardianship will be required – in which the court would appoint someone completely outside of your control.
Even when spouses think they won’t have any problems because “they are married” and “own things jointly,” this may not always be the case. If you should become incapacitated, your spouse may encounter some restrictions on their ability to sell property that you own together, if they were not named your agent. Don’t forget to get this invaluable document for adult children – as once they turn 18, mom and dad don’t have the ability to make any decisions or financial transaction on their behalf. Appointing an agent ahead of time prevents the court from ever having to become involved upon incapacitation, so everyone involved saves time and money.
You can draft a Durable Power of Attorney so it becomes effective immediately, OR so that it becomes effective only upon incapacitation. The latter is called a Springing Durable Power of Attorney. Both can be revoked at any time as long as the principal is of sound mind.
Executing a Durable Power of Attorney is a simple process, and does not require court involvement, so contact Geisler Law, PLLC to discuss your plan today!