The Importance of a Durable Power of Attorney
Without fail, one of the first recommendations I make to all of my new Estate Planning Clients is to get a durable power of attorney in place for themselves and their loved ones.
Why is it so important? - a durable power of attorney allows someone who you've properly appointed as your "attorney-in-fact" to act on your behalf should you become incapacitated. Moreover, your "attorney-in-fact" may even, in some instances, be able to act on your behalf after your death.
But, what does it mean to become incapacitated? - Incapacitation can be brought on simply by old age in the form of dementia or Alzheimer's. Dementia is normally a progressive condition which may come about slowly over a number of years or, in some instances, may progress quite rapidly once symptoms begin to manifest. Incapacitation can also be brought on by an emergency medical condition such as a stroke or physical injury. Certain brain trauma caused by a stroke or a sudden head injury can, at times, instantly render a person incapacitated. If such a person is without a durable power of attorney upon incapacitation, they likely will be unable to execute a durable power of attorney thereafter due to competency considerations.
What powers are held by my "attorney-in-fact"? - If an individual has been appointed your "attorney-in-fact", that person can act on your behalf to the extent granted by the provisions in the durable power of attorney. These provisions often grant your "attorney-in-fact" broad, discretionary powers to handle your affairs. Your power of attorney may even be drafted so that your "attorney-in-fact" may make health-related decisions on your behalf. Whatever power being exercised, your "attorney-in-fact" will still be subject to continued fiduciary duties to act for your benefit. The actions taken by your "attorney-in-fact" may be challenged to ensure that they are continuing to act properly and that they are not violating any of their fiduciary duties. Such a challenge can be raised by you or any other interested person. So, while your attorney-in-fact's powers are quite broad, they are still limited under the law.
How cost-effective is a power of attorney? - In a majority of cases, no challenges to the authorities granted to an attorney-in-fact or to the actions taken by an attorney-in-fact are made. This fact spares great expense in the form of legal fees and costs. A power of attorney is a cheap, effective way to make sure that your affairs are handled and that any issues therefrom stay out of court. If you do not have a power of attorney in place and you become totally incapacitated, the only source of authority to act on your behalf comes from establishing a guardianship. Establishing a guardianship is significantly more costly than obtaining a power of attorney.
You owe it to your family to execute a durable power of attorney while you are competent enough to do so not only to ensure that there are no hiccups in the handling of your affairs, but also to ensure that your estate value stays intact.