What is a Durable Power of Attorney?
Creating a Power of Attorney document means you are choosing someone, known as the attorney-in-fact, to represent you in case you are not able to represent yourself due to disability or incapacitation. The person you designate will then have the power to make decisions based on your written directives and your best interest. An advance directive, or healthcare directive brings together a living will and durable power of attorney. Combining both documents into one is one alternative, or the documents can be drawn up separately.
Some examples of using a power of attorney document could include allowing the agent access to safety deposit boxes, being present during a tax audit, or handling stock transactions. You can designate a full power of attorney or write it so the agent can only take certain actions. When the principal dies or becomes incompetent, the power of attorney terminates. The principle can also revoke the power of attorney whenever he wishes.
Types of Power of Attorney
In certain cases, a durable power of attorney may be more in line with your needs. This is a specific type of power of attorney that remains in effect even if the principal becomes incapacitated, as opposed to terminating as would happen with the general power of attorney. There are two types of durable power of attorney. The first is an immediate power of attorney meaning it becomes effective immediately upon signing. The second type is a springing power of attorney. This type of document is set to spring into effect upon meeting certain criteria, such as the principal being incapacitated. The main focus of most power of attorney documents are to handle the management of property or health care directives.
Benefits of a Power of Attorney
A durable power of attorney in place can bring peace of mind to everyone involved. Having this document in place eliminates the need of a costly and possibly humiliating court process to determine that the principal is incapacitated, and to appoint a caretaker or guardian. With the durable power of attorney in place, the principal can rest assured knowing his affairs will be in capable hands if he is not able to manage them himself. It’s never too early to think about planning for these important documents as part of your estate plan.
A durable power of attorney can confer power to make all decisions, or only grant power in limited circumstances. Because the court does not need to become involved once this document is in place, the principal avoids unnecessary cost and stress.
Contact Denver Estate Tax Planning today for more information on Durable Power of Attorney questions that you may have.