{"id":43,"date":"2014-09-02T22:50:10","date_gmt":"2014-09-02T22:50:10","guid":{"rendered":"https:\/\/www.hometownestateplanning.com\/?p=43"},"modified":"2014-09-04T19:37:42","modified_gmt":"2014-09-04T19:37:42","slug":"durable-powers-of-attorney-the-power-of-trust","status":"publish","type":"post","link":"https:\/\/www.hometownestateplanning.com\/?p=43","title":{"rendered":"Durable Powers of Attorney: The Power of Trust"},"content":{"rendered":"

Durable Powers of Attorney: The Power of Trust<\/strong>\"stock-photo-11173640-closeup-of-pens-and-paper-while-business-people-discuss-reports[1]\"<\/a><\/p>\n

by Richard E. Phillips<\/p>\n

What Is It?<\/strong><\/p>\n

A Durable Power of Attorney, sometimes called a Financial or Property Power of Attorney, is a useful and powerful document in your estate planning portfolio.\u00a0 This document appoints your agent to handle any matters it\u2019s entitled to under the terms of the document, subject to state and federal laws.\u00a0 Typically, your agent is granted the authority to do all things you would do acting on your own behalf.\u00a0 There are exceptions under the law, such as voting on your behalf or serving on a jury.\u00a0 Historically, a Durable Power of Attorney was used due to a person\u2019s unavailability.\u00a0 If someone was going to be out of town or out of the country for an extended period of time, that person would appoint an agent through this document to handle their financial affairs while they were gone.<\/p>\n

Durable Powers of Attorney are still used in this manner today, most often by military couples because a service member will be deployed overseas.\u00a0 But over the last several decades, this document has been used mostly in the realm of incapacity.\u00a0 A person (the principal) becomes mentally incapacitated and has appointed an agent to handle his or her financial affairs during the time of mental incapacity, whether temporary or permanent.<\/p>\n

Why Have It?<\/strong><\/p>\n

The reason this document should be included in your estate plan is because you want someone of your own choosing managing your financial affairs for you should you become incapacitated, instead of someone chosen by your local probate court through a guardianship\/conservatorship proceeding.\u00a0 That\u2019s right!\u00a0 If you have not designated who will manage your financial affairs in case of your mental incapacity, the probate court will choose someone for you.\u00a0 And it may be someone you would never have intended to control your estate.\u00a0 The process for choosing your conservator to manage your financial affairs for you due to your mental incapacity is popularly known as \u201cliving probate.\u201d<\/p>\n

Living probate can be a living nightmare for your family.\u00a0 It is a humiliating process where you are publicly declared incompetent by a court of law.\u00a0 The probate court decides who will manage your affairs, not you and not your family.\u00a0 The court process involves aggravating paperwork, delays and expenses.\u00a0 Such expenses include probate fees, attorney\u2019s fees, and accounting fees.\u00a0 Once your conservator has been appointed by the court, you have to go through the further indignity of having your conservator being required to provide an annual accounting to the probate court on how your finances have been managed.<\/p>\n

If you have an estate plan built around a fully-funded revocable living trust, the successor trustee you appointed in your trust agreement can take over your estate upon your mental incapacity according to the terms of your trust, thus avoiding living probate.\u00a0 A Durable Power of Attorney should still be drafted in case an asset was not funded into your trust before your incapacity.\u00a0 Then, the agent of your power of attorney can manage that unfunded asset for your and usually has the power to fund that asset into your trust for your behalf.\u00a0 However, if you have estate plan built around a will or no estate planning documents whatsoever, you must have a properly drafted Durable Power of Attorney document in order to avoid living probate.<\/p>\n

\u00a0<\/strong><\/p>\n

When Can the Power Exist?<\/strong><\/p>\n

You can decide in your document when the agent of your Durable Power of Attorney has the power to handle your affairs.\u00a0 Your choices are typically either (1) immediately upon your signing of the document or (2) a \u201cspringing\u201d power, meaning your agent cannot handle your affairs until a condition is met, such as proof of your mental incapacity according to a letter from your physician.\u00a0\u00a0 I know that it sounds like a no-brainer that latter option is advisable, but in my opinion the reverse is more often true.\u00a0 The reason being, this document is typically used on an emergency basis, your mental incapacity or you\u2019re at least temporarily unable to handle your own affairs due to a medical emergency.\u00a0 If your loved ones have to wait for a physician\u2019s letter (which he or she doesn\u2019t have to write) before your affairs can be handled for you, then it could be a costly wait, or at the very least, an unnecessary hassle for your family during a stressful time.<\/p>\n

We hear the occasional horror story of someone being cleaned out because they appointed the wrong person as their agent.\u00a0 However, we hear these stories because they are a rare occurrence.\u00a0 If you\u2019re married, your first agent will likely be your spouse.\u00a0 Most other times it\u2019s one of your children or a trusted friend.\u00a0 If they have the immediate power on paper, in practice they can handle your financial affairs immediately and seamlessly if something happens to you that leaves you unable to handle your own affairs.<\/p>\n

Conclusion<\/strong><\/p>\n

A Durable Power of Attorney is a necessary part of your estate planning portfolio because it can spare your family heartache, hassle, and expense if you have decided ahead of time who will manage your finances upon your possible mental incapacity.<\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

Durable Powers of Attorney: The Power of Trust by Richard E. Phillips What Is It? A Durable Power of Attorney, sometimes called a Financial or Property Power of Attorney, is a useful and powerful document in your estate planning portfolio.\u00a0 This document appoints your agent to handle any matters it\u2019s entitled to under the terms … Continue reading Durable Powers of Attorney: The Power of Trust<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[9,29,10],"class_list":["post-43","post","type-post","status-publish","format-standard","hentry","category-estate-planning","tag-durable-power-of-attorney","tag-estate-planning","tag-power-of-attorney"],"_links":{"self":[{"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/posts\/43","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=43"}],"version-history":[{"count":3,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/posts\/43\/revisions"}],"predecessor-version":[{"id":50,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=\/wp\/v2\/posts\/43\/revisions\/50"}],"wp:attachment":[{"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=43"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=43"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.hometownestateplanning.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=43"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}