When you give power of attorney to your loved one or a trusted individual (agent), that person gains the power to act on your behalf. However, one major limitation of this is that if you are deemed unable to act competently, your agent is automatically assumed to be unable to act too. The power of attorney becomes ineffective and a court appointed guardianship is necessitated.
This is a common problem particularly among the elderly:
One of the most common concerns I hear from people is “My older parent’s behavior is concerning me and I’m worried about her mental abilities.”
As I explained in my last post: it’s not always dementia but often it is. And unless a senior has done a good job planning ahead, it can be very hard and messy for others to intervene as needed.
But hopefully that’s not yet your situation.
In which case, you might be wondering: Given that it’s so common for seniors to eventually start slipping mentally, what kind of planning should older adults and families do to avoid this kind of situation? Via Better Health while Aging
In order to go around this, there exists what is called the durable power of attorney. When you complete the durable power of attorney (POA) document, the agent is allowed to make decisions on your behalf should you become incapacitated. This ensures that this power is given to someone of your choice that you trust.
There are two main types of POAs:
- Financial POAs that grant the agent authority to make financial decisions on your behalf
- Healthcare POAs that grant the agent authority to make healthcare decisions on your behalf.
You also get to decide whether the POA become effective immediately or you can state that it should only become effective once certain circumstances take place. This can be, for instance, when a medical expert confirms that you are indeed unable to make decisions on your own (springing power), though this may sometimes create complications.
However, a springing power can be more difficult to use because disability is usually defined in the POA document and requires one or two doctors to submit a written certification that the principal is unable to manage their affairs. Also, many financial institutions have adopted internal rules about the certification of disability and tend to question the validity of a POA document. In recent years, the springing power has become frustrating to agents who are usually trying to use the document in an emergency. This is why we recommend a POA be immediately effective to avoid the hassles of a springing power. Also, an immediately effective POA can be useful in case the principal is out of town, allowing the agent to step in and take care of important business in the absence of the principal. Via Kreisenderle
If you do not sign a POA document and become incapacitated, it would mean your loved ones would not be able to make important decisions concerning your health or finances until they are named your legal guardian in court. This may result in serious delays in getting services or even paying your medical bills.
It is also important to note that durable power of attorney is only valid as long as you are alive. Should you die, your agent no longer has the durable power of attorney.
Just recently a gentleman came into our office to discuss this very issue. He was a joint owner of his mother’s only bank account, but she was the sole owner of a mutual funds account worth approximately $125,000. On a Friday, this gentleman thought that he should – as his mother’s Attorney in Fact – transfer the mutual funds into the joint account so that he could pay her nursing home bills. But because he had other things that he needed to take care of that day, he put off the transfer intending to do it at the beginning of the following week.
Unfortunately, his mother died that weekend and her son was no longer able to access her mutual funds account. Via Counsel First
In a scenario such as the one mentioned above, a probate estate must be opened in court, which would name the son the executor so he can access his mother’s account. It usually takes months to clear assets within an estate, and it also come with additional costs such as court and attorney fees as well as inventory taxes.
As such, it is also advisable to name someone you trust as your executor, giving him or her authority to wind up your affairs after your death. Keep in mind that you are free to revoke a durable power of attorney at any time as long as you are mentally competent.
If you would like professional legal advice concerning your estate planning or estate administration in North Carolina, contact Meek Law Firm today. Attorney Jonathan Meek has assisted many people with their legal needs and he can help you as well. Call (704) 848-6335 or use the contact form on the right of this page to schedule a consultation appointment. We look forward to hearing from you.