Durable Financial Powers of Attorney
Frequently Asked Questions
Planning in case of incapacity
by Elizabeth A. Perry
Why do I need a durable power of attorney?
So you will have someone (your attorney-in-fact) to handle your finances and make decisions for you if you become incapacitated (i.e. from Alzheimers, stroke, dementia, etc).
Can’t my spouse handle my finances for me?
Your spouse can not sell or refinance your real estate without a durable power of attorney. Often, they can not access your other assets.
Can’t I sign a durable power of attorney if and when I lose “capacity”?
No, then it’s too late. You have to have legal capacity to be able to effectively sign a legal document such as a power of attorney.
Who should be my durable power of attorney?
Only someone you absolutely trust to do a good job for you. If you are incapacitated you are totally vulnerable to their decision making.
What if something happens to my attorney- in-fact?
You should name at least one back up person to serve as your attorney-in-fact if your first choice can not serve for any reason.
Can more than one person be my attorney-in-fact?
Yes, you can have co-attorney-in-facts. The trade off is between the efficiency of having just one person making decisions and the protection of having two people involved in the process.
How long does a durable power of attorney last?
A durable power of attorney continues until your death. (A non-durable power of attorney is no longer valid if you are incapacitated.) After death, the personal representative named in your will or the trustee of your trust (who can be the same person as your attorney-in-fact) is in charge of your affairs.
May my attorney-in-fact give away my assets?
Legally your attorney-in-fact may not give away your assets unless the durable power of attorney document explicitly provides he may make gifts. After careful consideration, you may decide you want your attorney-in-fact to have the option of making gifts for Medicaid or tax planning reasons. If so, the durable power of attorney document needs to provide authorization for gifting. But remember, no one is supervising your attorney-in-fact, so he or she must have your full confidence. Also, there are tax issues to consider.
What is the test for whether I have lost “capacity”?
Usually you provide in your durable power of attorney that your doctor must sign a statement stating it is his or her belief you can no longer manage you affairs and that then establishes you have lost legal “capacity” for purposes of your attorney-in-fact having the authority to act on your behalf.
What happens if I don’t have a durable power of attorney and lose “capacity”?
Then your spouse, family member, friend or a stranger has to petition the court to become your guardian. A guardianship is like doing a probate before you die only more time consuming and complicated and thus is an expensive process. A guardianship does not end until you die. Among other things, your guardian has to be bonded, prepare an inventory of your assets and make annual accountings to the court.
Can a revocable living trust avoid the need for a guardian of my estate also?
Yes, in your revocable living trust you can name a trustee to succeed you if you become incapacitated. Your successor trustee can then manage the assets that are in your trust and pay your expenses.
Elizabeth A. Perry, a member of the National Academy of Elder Law Attorneys, has been helping Clark County residents with their estate planning needs for over 20 years. Her practice emphasizes wills, trusts, probate and Medicaid planning. You are invited to call her to schedule an appointment or sign up for a class at (360) 816-2485. ©Liz Perry 2015
(The above should not be construed as specific legal advice and is intended for general information purposes only)
Durable Financial Powers of Attorney