Powers of Attorney – Valuable Estate Planning Tools
A simple form of estate planning can be handled by the use of a Durable General Power of Attorney. A Power of Attorney is a document which allows you to appoint another person to act for you while you are alive. You appoint that person as your “agent.” Most commonly, married individuals appoint their spouse, others may appoint an adult child, other relative or close friend. Regardless of who is actually appointed, the person you appoint as your agent should be someone you can trust to make practical decisions on your behalf, and who would be physically and mentally able to sign documents, checks, tax returns, or any paperwork that would need your signature. In effect, a Power of Attorney lets your “agent” act in your place when you are unable to handle things for yourself.
An important element of a Power of Attorney is that it is effective from the time it is executed, but only while you are alive. As such, your agent can act for you only during your lifetime, and his or her authority as granted under the Power of Attorney document ends upon your death. (It is at that time that your Will or other trust document would come into effect).
The Power of Attorney is a document that allows you to prepare and plan for the unexpected. It should enable someone to handle your financial, and possibly health care, decisions for you if you were to suffer a stroke and be left (even temporarily) unable to think clearly or write, or if you became a victim of Alzheimer’s disease, organic brain syndrome, or any of the many other aging processes that affect your thinking and/or physical ability to handle your own finances and personal decisions.
The type of power of attorney document I originally referred to above is that of a “Durable General Power of Attorney.” The language in this type of power of attorney is broad and encompasses almost any task, written document, or decision that could possibly be made by your agent on your behalf. The word “general” refers to the broad scope of authority that is passed to your agent. The term “durable” refers to language that is included in the power of attorney which provides that the document (which represents your authorization for someone else to act for you) will remain in effect regardless of any incapacity or disability suffered by you. This language is very important and should be in all general powers of attorney. In Pennsylvania, all power of attorney documents are now deemed to be “durable,” unless they state otherwise.
What is the primary benefit of having a Durable General Power of Attorney? The main advantage of having a Durable General Power of Attorney in place – formally signed and notarized – is that your family can avoid the need to seek authority through the courts to handle your affairs should you become incapacitated. Under newly adopted Pennsylvania laws relating to Guardianships, an “incapacitated person” is defined as “an adult whose ability to receive and evaluate information effectively and communicate decisions in any way is impaired to such a significant extent that he or she is partially or totally unable to manage his or her financial resources or to meet requirements for his or her physical health and safety.”
In a situation where you have no durable power of attorney in effect and become incapacitated, your spouse, next-of-kin or close friend would have no legal authority to handle financial matters for you. Thus your family member or friend would have to file a petition with the court to have you legally declared incapacitated and to obtain an appointment as Guardian.
When a guardianship procedure must be undertaken due to the absence of a Durable Power of Attorney, the additional cost for the doctor’s testimony and the attorney’s fees for filing the petition, court appearances and later filings, as well as the fee for the surety bond and subsequent filing fees for documents relating to the mandatory court control and supervision of guardianships can be quite costly, but such costs can all be avoided by the preparation and execution of a simple Durable General Power of Attorney.
Each adult would be well advised to give serious thought to the idea of executing a Durable General Power of Attorney form naming someone you trust to act in your behalf. In the interest of handling banking and financial matters, such easy and simple planning now could prevent hours of uncertainty, worry and expense later, should the unexpected occur and you find yourself in a situation where you are unable to handle your own financial and other decisions.