There is more to estate planning than simply executing a Last Will or a Trust to arrange for the transfer of your financial assets. You must also think about the possibility of incapacity, and this can be addressed through the execution of legally binding documents called Durable Powers of Attorney.
Durable Powers of Attorney are different from standard Powers of Attorney because they remain in effect even if the grantor of the device was to become incapacitated. With Durable Powers of Attorney, you empower people of your own choosing to make decisions in your behalf in the event of your future incapacitation.
What are the advantages that are gained? The overarching advantage would be the execution of Durable Powers of Attorney Will render a potential future guardianship hearing unnecessary.
If you were to become unable to make your own decisions as a senior citizen, interested parties could petition the court to appoint a guardian to act on your behalf. Many people would like to avoid this because they would feel more comfortable choosing their own decision-makers.
Having the ability to choose your own decision-makers is one advantage, but in addition to this you may be nipping family disagreements in the bud when you execute Durable Powers of Attorney. It is possible that a family member may feel as though you need a guardian, and others may disagree.
Another possible scenario would be agreement among all interested parties with regard to the need for a guardian, but a lack of concurrence with regard to who should act as guardian.
Springing Durable Powers of Attorney
If you execute a Durable Power of Attorney it will become immediately effective. The attorney-in-fact would be legally empowered to act on your behalf right away.
However, depending on where you live it may be possible to execute a legally binding device called a Springing Durable Power of Attorney. A Springing Durable Power of Attorney “springs” into effect only upon the incapacitation of the grantor or principal.
As long as you are of sound mind, the agent that you select when you create the Power of Attorney would not have the right to act as your representative.
Two Separate Powers of Attorney
To account for the possibility of incapacity you may want to use two different Powers of Attorney: one for financial decisions, and one for health care decision making.
If you do this you have the ability to name two different respective attorneys in fact. This would be useful if the person that you want to see making your financial decisions is not the same person that you would want to empower to make your health care decisions.