A durable power of attorney is a practical option for an elderly who wants to plan how his or her properties, business, and other affairs will be managed when time comes he or she is mentally unable to do so. It is especially useful for people who are suffering from a debilitating health condition such as Alzheimer’s disease or are going to stay in a nursing home.
Right after you and your agent have signed the documents, the durable powers of attorney take effect until they are revoked by the principal. The document is terminated at the death of the principal. Durable powers of attorney are named that way because no additional corrections to the documents are necessary once the principal becomes mentally incapacitated. Thus, this type of powers of attorney is an enduring one since it remains in effect even if the principal is mentally incapable of making decisions for himself or herself.
Durable powers of attorney are classified into two general types: health care and financial. As the name suggests, health care durable powers of attorney authorize a person, who is called an agent or an attorney-in-fact, to make all the needed choices regarding health care and hospitalization on behalf of the principal. The decisions can be made by the agent once the principal is no longer able to do it for himself or herself. This type of durable powers of attorney takes effect when the principal has become mentally incapacitated or has a terminal disease. It grants the agent the right to decide on what to do with the principal’s remains after his or her death, as well as donate the organs for educational, scientific, or transplant purposes.
What if I have not appointed someone as an agent to oversee of my health care, you might ask. If nobody has powers of attorney to act on your behalf and you are already unconscious or mentally incapable, the courts will assign someone to make health care decisions for you.
The second type of durable powers of attorney is financial in nature. It is defined as the full legal authority given to another individual to be responsible for all your finance-related affairs, including filing income tax returns and paying the bills. The agent can even sign documents on behalf of the principal.
This agent is allowed to handle all the principal’s finances except the assets owned by the revocable living trust. Examples of assets outside the living trust include pension plans, annuities, and IRAs (individual retirement accounts). These assets are managed by the attorney-in-fact designated by the principal who owns the assets. As with a living trust, durable powers of attorney protect the privacy of the principal as well as prevent delays in financial transactions.
It pays to plan your estate before you become unable to manage things by yourself. On that note, it is important to have a durable power of attorney ready so that you can rest assured that someone you trust will manage all your finances, assets, and health care issues instead of a person appointed by the courts.
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The power of attorney is a legal document that authorizes a person or organization to act on financial and business matters affairs of a person referred to as the principal. The person or organization that receives authority is called the agent or the attorney-in-fact.
The durable power of attorney is called such, since the attorney-in-fact would continue to have authority and act on behalf of the principal, even if the principal becomes incapacitated. Though the durable power of attorney has such characteristic, it is still important for the document to state that it would remain valid even if the principal becomes incapacitated or disabled.
The durable power of attorney can be useful in situations when the principal is seriously ill, disabled, and if their property is modest but do not need setting up fund trusts or guardianship. This is also favourable for married couples whose account is joined.
The durable power of attorney is also referred to as the health care power of attorney. In many situations, the health care power of attorney is different from the agent who would oversee financial and business matters. The attorney-in-fact who is given the durable power of attorney is required to make decisions related to the principal’s health like stopping life support or performing surgery.
Laws on how the power of attorney should be created are different on each state. For example, in South Carolina, the preparation for the power of attorney is the same as preparing for a will. In California, notarization in the documents is important but this may not be the case in some states. This is why it is important to have knowledge on legal matters and employ legal assistance when making the document.
A possible problem with the durable power of attorney is that the principal may not want the attorney-in-fact to take specific liberties. The principal could specify in the document what specific decisions the durable power of attorney can make. Aside from that, the document could specify that the durable power of attorney could take effect in the event the principal becomes disabled.
The durable power of attorney could cover different decisions and responsibilities, aside from health care decisions, like:
• Providing gifts which can play a major part in estate tax planning.
• Accessing safe-deposit boxes.
• Signing tax returns, IRS documents, and settling tax disputes.
• Pursuing legal matters or litigation on behalf of the principal.
• Collecting benefits from health and other insurances on behalf of the principal.
• Setting up or amending trust funds.
• Revoking the power of attorney.
Laws covering the power of attorney vary in each state. For example, if the attorney-in-fact is the spouse and they get a divorce, the power of attorney is terminated. The court may also rule the document to be invalid, especially if the principal is proven to be incompetent when the document was signed. The principal could also revoke it, as long as he is mentally sound.
The power of attorney could also be terminated if the attorney-in-fact becomes incompetent, unavailable or dies. To avoid problems, the principal could identify an alternate attorney-in-fact and state it in the document. Make sure to identify the situations when the alternate would take responsibility.
Power of Attorney Related Articles
- An Insight On The Different Types Of Power Of Attorney
- Choosing an Agent for your Power of Attorney
- Choosing The Best Agent For Your Power Of Attorney
- Essential Information about Durable Power of Attorney
- Frequently Asked Questions about Power of Attorney
- How an Agent in Your Power of Attorney should Manage Your Money
- How Much Power of Attorney Should You Give to Your Attorney-in-Fact?
- Important Considerations When Creating a Financial Power of Attorney
- Medical Issues And Power Of Attorney
- Power of Attorney 101
- Power Of Attorney And Its Validity
- Power of Attorney: A Brief Overview
- Power of Attorney: Should You Get One?
- Power of Attorney: What to Consider in Choosing an Attorney-in-Fact
- Preparing for Your Future? Consider a Health Care or Medical Power of Attorney
- Seven Steps in Preparing a Power of Attorney
- The Pros And Cons Of The Power Of Attorney
- Types Of Power Of Attorney
- Understanding The Power Of Attorney
- Watching It: Power Of Attorney And Problems}
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- What Power of Attorney Is
- Why Do You Need to Prepare a Power of Attorney?