DURABLE POWER OF ATTORNEY
WHAT IS A DURABLE POWER OF ATTORNEY?
WHAT IS A DURABLE POWER OF ATTORNEY?
A Durable POA is a written legal document that creates an agency relationship between the individual called the “principal” and friend or family member. It could also be another person. For example, an appointed professional (this person is known as the “AGENT.”
It’s a way to plan for incapacity. The principal authorizes his/her agent to manage his/her financial affairs in the event of incapacity.
You can have a general power of attorney, which authorizes your Agent to handle your financial affairs, such as paying bills, taking care of taxes etc. If you are going to be gone from your residence for an extended period of time and you do not wish to think about your financials while you are gone (an extended vacation for example), then a general power of attorney may be a good fit for your needs. A general power of attorney is the most inclusive POA. The durable power of attorney remains in effect even after the principal has lost capacity. This is helpful in situations where a loved one is close to passing away and important decisions need to be made.
Even so, a general power of attorney, along with the other powers of attorney, may be revoked at any time as long as the principal has the mental capacity to do so.
A limited power of attorney is just as it sounds. It's limited to a particular event or action. A limited power of attorney may be helpful for someone who has difficulty physically with writing checks or being on the computer and is otherwise mentally capable. They can appoint someone to pay their bills in the event such transactions cannot be done automatically. Once the type of action or event is completed, as long as it is not an ongoing action or event, the agent will no longer be authorized with limited power of attorney.
A springing power of attorney is a durable power of attorney that does not become active until after the principal has lost capacity or become incapacitated. The fact that individuals become incapacitated is one of the most important reasons to have a power of attorney in place so that when death is near or tragedy strikes, your estate planning is in place.
ESTATE PLANNING AND PLANNING FOR INCAPACITY WITH DURABLE POWER OF ATTORNEY IN ARIZONA
Estate planning, as mentioned before, is so important. Whether you are young or old, it makes a big difference when you have an estate plan in place. There have been many people, usually related to those who have failed to do their estate planning, that have had extreme difficulty paying bills that need to be paid or making decisions regarding property, and a million other things that come into play when people become incapacitated due to injury or the effects of old age.
If the decisions that need to be made are unrelated to finances, you need a healthcare power of attorney, which allows your designated agent to make medical decisions on your behalf and to speak with your medical doctors. If you sign a HIPAA release, the person designated in the release is also able to view your medical records. It's important to consider who you trust and would act according to your wishes when thinking about who to choose as your durable power of attorney and your healthcare power of attorney, which can be two separate people or they can be the same person. It's also important to understand that a healthcare power of attorney and a mental healthcare power of attorney are not the same and, therefore, do not provide the same authority.
SO WHY IS IT IMPORTANT TO HAVE YOUR ESTATE PLANNING IN PLACE WITH A DESIGNATED POWER OF ATTORNEY?
For all of the reasons we have already discussed, it is so important to have a power of attorney in place for finances, healthcare and even mental health. Some people may choose to just add someone onto their financial accounts and bank accounts in order to be able to help with their financial affairs, but that doesn't always work very well. In those instances, those people can take the money for whatever they wish. With power of attorney, they have an obligation to act in your best interest. Further, if that person or those people you added to your bank account were to pass away, if that person or those persons had debts that could not be paid from their estate, creditors would be able to reach into your account that you put them on to meet their financial obligations. Again, with a power of attorney, that is not a concern.
If you have questions about the different types of powers of attorney or you want to learn more about wills and trusts, call Koberlein Law Firm at (480) 776-6912.