July 12, 2016
As estate planning attorneys, we strongly recommend that our clients have a properly drafted General Durable Power of Attorney and a Power of Attorney for Health Care. Along with a Last Will and Testament or Trust, these Power of Attorney documents can save time and thousands of dollars in court costs and attorney fees. They are a key element in a complete estate plan.
Within this article, we will limit our discussion to General Durable Power of Attorney documents. A General Durable Power of Attorney is often referred to as a POA, financial POA, or POA for finances. This type of POA can be drafted to be effective immediately or it can be drafted to become effective only if you are no longer able to handle your financial affairs which is called a “Springing General Durable Power of Attorney.”
Give Yourself Peace of Mind
A properly crafted estate plan can give you peace of mind, knowing your assets and family are well protected. Our estate planning lawyers will help you get there.
What is a General Durable Power of Attorney?
A General Durable POA sets forth who can make financial decisions for you in the event that you are unable to do so for yourself or if you are having difficulty making financial decisions and need help.
A General Durable POA can be limited or very broad – depending upon your needs and circumstances. It can be used while you are still competent and need help, or it can be drafted as a “springing” POA that can only be utilized if you are unable to handle your financial affairs as certified by a doctor.
The Value of a General Durable Power of Attorney
A properly drafted POA can save you and your loved ones time and money and the uncertainty and difficulty of the guardianship process.
A General Durable POA can also save your loved ones the uncertainty of not knowing your wishes or who you want in charge of your financial affairs.
The financial POA can be a relatively simple document that can save your thousands of dollars and possibly avoid in-fighting amongst family member.
Misconceptions about General Durable Power of Attorneys
General Durable POA Cease to be Valid Upon Death
It is important to mention that financial POA documents such as General Durable Power of Attorneys are only valid during lifetime. These POA’s ceases to be valid upon death of the personal making the POA document. Therefore, upon death a POA can no longer to used to pay bills or sell real estate or sign tax returns and all of the other powers that a financial POA typically empowers your agent to handle. This is a very common misconception, so let us say again that your financial POA will no longer be valid upon your death.
A Financial POA Does Not Replace a Revocable Trust or Last Will and Testament
As it would no longer be valid upon death, a financial POA does not replace the need for a Revocable Trust or Last Will and Testament (will).
Although the financial POA is important, its place in our estate planning tool-box covers financial matters during your lifetime. Consideration will need to be given to what is appropriate following death, and is typically set forth in your trust or will. Avoid the misconception that somehow your POA will be able to handle your financial matters and settle your affairs after death. Your POA will not have any such power.
What if You Don’t Have a General Durable Power of Attorney?
If you do not have a General Durable POA in place prior to becoming unable to handle your financial affairs, a guardianship proceeding will be necessary. A guardianship proceeding is a court process by which a court appoints a guardian of the estate to be in charge of your finances. This is a very costly and time-consuming procedure which requires court hearings, doctor reports, inventories, bonds and other costs and more. It normally involves at least two attorneys, both of which are typically paid by the person in need of the guardianship.
Having a General Durable POA and a Power of Attorney for Health Care normally eliminate the costly and cumbersome guardianship process.
Get in Touch
To discuss your estate planning wishes, including a financial POA, we welcome you to contact our experienced estate planning lawyers on 262-658-2181 or info@wokwicz.com.