Incapacity planning is an important part of estate planning. Incapacity can happen to anyone – a silly accident, falling off a ladder while pruning – is all it takes. Powers of Attorney are a vital incapacity planning tool. You must, however, sign a power of attorney before becoming incapacitated or before a dementia diagnoses.
With a power of attorney, the principal (the signer) chooses a person he or she trusts to act for him or her as agent, or as attorney-in-fact. The decision is not left to chance. Without estate planning documents, or if there are problems with the existing documents, a conservatorship, an expensive court-supervised process, where the court appoints someone to act, is usually the only option.
A power to act could be granted for a specific purpose or duration using a limited power of attorney, to handle the sale of an out-of-state asset, for example.
For incapacity planning, a durable power of attorney is required. A power of attorney that is Adurable@ endures during the principal’s incapacity, and must contain specific language regarding validity during incapacity. There are two basic types of durable powers of attorney, Springing Durable Powers of Attorney and Durable Powers of Attorney. Springing Durable Powers of Attorney “spring” into action upon incapacity with a physician’s letter. Durable Powers of Attorney (non-springing) are effective immediately upon signing.
The proper document, correctly executed, is the key to a successful plan and avoiding conservatorship. Where incapacity planning is the goal, the power of attorney must be “durable”, or effective during incapacity. The agent must be alive, available, willing to act and trusted by the principal.
If you have a power of attorney, review it with your attorney to ensure that the document is still right for you.