Why Does Everyone Need A Durable Power of Attorney?
Everyone Needs A Durable Power of Attorney
We all know someone who was suddenly and unexpectedly thrust into the role of taking over the financial affairs of their loved one. Perhaps it was a stroke, a brain injury, or dementia that caused the situation. While none of these things are fun to think or talk about, pretending they might not happen is unwise when a simple document – a durable power of attorney – can prevent a considerable inconvenience, and allow a better transition. And, in many instances, ensure your continued care and wellbeing by persons you love, trust, and upon whom you may ultimately be dependent.
What is it?
Let’s compare a “regular” power of attorney to a durable power. A regular power of attorney allows you to name an agent to make only certain specified decisions and to act upon them for you. For example, we use a power of attorney in our real estate closings. Typically for convenience, our client will give me power of attorney to sign off on the final figures (the settlement statement). This type of power of attorney is extinguished upon completion of the act and is invalid if you become incompetent. A durable power of attorney is different as it is typically unlimited and names an agent to attend to all of the person’s financial decisions granting the power. Most importantly, the durable power of attorney is still valid if you become incompetent.
What Can My Agent Do With the Durable Power of Attorney?
Our durable power of attorney states the following and gives your agent the power:
To exercise or perform any act, power, duty, right or obligation whatsoever that I now have or may hereafter acquire, relating to any person, matter, transaction or property, real or personal, tangible or intangible, now owned or hereafter acquired by me, including, without limitation, the following specifically enumerated powers. The “enumerated powers” then include powers to collect monies and pay debts, purchase and sell assets, manage assets, conduct banking transactions, gift money or assets, manage trusts, and more. Essentially, every conceivable financial power is given to the agent.
What is the benefit of it—if I don’t have one, what happens?
If you do not have a durable power of attorney, your assets are not jointly owned, and you are not willing or able to give consent for a guardianship, your loved ones would need to institute a conservatorship proceeding in Court for the appointment of someone to make legal, financial, and other decisions for you. This proceeding requires examinations by experts and oftentimes requires the conservator to report back to the Court. The expense of this type of proceeding is many times the cost of having a durable power of attorney prepared. An ordinary power of attorney expires if you become mentally incompetent, but a durable power of attorney “survives” that event, and its power endures until death or revocation, allowing your family to manage your financial affairs. Upon death, the durable power of attorney ends, and the provisions of your Will take over. Often, the person named as agent in our clients’ durable power of attorney is also named executor in their Will. An executor of an estate collects the estate assets, settles the estate, and distributes the assets to the beneficiaries consistent with the terms set out in the Will.