Key Takeaways:

• A durable power of attorney document allows a trusted person to manage your financial and legal affairs if you are unable to.
• Without it, family members will likely have a hard time paying bills and making arrangements.
• This can lead to delays and extra costs.

Question:

What is a Durable Power of Attorney and what are the benefits of having one?

Response:

A durable power of attorney is a document through which you appoint another person, or two people, to be your “attorney-in-fact” to step in and manage your financial and legal affairs if you ever become incapacitated. For many of us, the durable power of attorney is the most important estate planning instrument – even more important than a will.

What happens if there is no durable power of attorney? Without it, family members may well have difficulty paying bills, accessing accounts, and dealing with business interests. They may not be able to pay for the medical care you need, maintain your house, or care for your loved ones.

As a result, absent this relatively simple document, family members often have to go to court to appoint a conservator or guardian to manage the incapacitated person’s affairs. That court process takes time, costs money, and the judge may not choose the person you would prefer to serve in this role. In addition, once a guardianship or conservatorship is in place, the representative may have to seek court permission to take planning steps that she could implement immediately with a simple durable power of attorney.

One of my cases illustrates how much easier this process can be if a durable power of attorney is in place.

My client, a successful accountant, unfortunately became somewhat demented due, apparently, to longtime excessive drinking. He had an ongoing business that he could no longer manage which involved many complicated matters, including a dispute with a key employee and concerns by his major client about the confidentiality of its records.

Fortunately, a few years earlier the client had executed a durable power of attorney naming his son as attorney-in-fact. Using the power of attorney, the son was able to get himself appointed, instead of his father, as the key corporate officer for the accounting firm and to fund his father’s revocable trust to be managed by a respected trust company. As corporate officer, the son was able to oversee the winding down of the business and work out matters between his father and the former employee. As attorney-in-fact, the son was able to clean out his father’s apartment, terminate the lease, and sign an agreement for his father to live at an assisted living facility.

Without this one document, the son would have had to seek court authority, not only causing delays and added legal expenses, but also requiring him to serve his father with papers establishing his father’s incapacity and making his situation public, potentially causing a dispute between them.

Related Articles:

What Can a Family Member Do with Agent Under Durable Power of Attorney Won’t Share Information?

Does Being an Agent under a Power of Attorney Mean You’re Taking on Financial Responsibility?

Three Essential Documents for Parents of Children with Special Needs

Most Adults With Special Needs Require Estate Planning Documents