When thinking about estate planning, typically people will focus on naming the beneficiaries of their estate and making arrangements so that the estate can avoid probate when they pass away. In many cases, this is accomplished by the preparation of a will, a living trust and/or certain other probate avoidance documents. While all of those documents are an important part of the overall estate planning process, durable powers of attorney for financial matters and health care are just as important. In fact, regardless of whether they have an estate plan, every adult should ensure they have these two durable powers of attorney.
Health Care Durable Power of Attorney
A health care durable power of attorney is a document in which you (the “principal”) name someone else (the “patient advocate”) to make health care decisions for you when you are no longer able to do so. This document does not take effect until you have been determined to be legally incapacitated and incapable of making your own health care decisions.
Financial Durable Power of Attorney
A financial durable power of attorney is a document in which you (the “principal) name another person (the “attorney-in-fact” or “agent”) to act on your behalf regarding your affairs. Unlike the health care durable power of attorney which only takes effect once you have been determined to be legally incapacitated, a financial durable power of attorney can be written to be either “springing” or “non-springing”.
A non-springing financial durable power of attorney becomes effective immediately upon execution, which means that your agent can act for you even if you still have legal capacity.
A springing financial durable power of attorney, like the health care durable power of attorney, only becomes effective (or springs into action) when you are no longer able to act. In fact, your agent will be prohibited from acting until there has been a determination that you are legally incapacitated.
Choosing Patient Advocates and Agents.
With both the financial and health care durable power of attorney, it is vitally important that you name people who are trustworthy and who will act in your best interest when carrying out their respective duties as your agent and patient advocate. Typically, people will name family members and/or trusted friends to act in these capacities.
What Happens When There Are No Durable Powers of Attorney?
If you have not implemented financial and health care durable powers of attorney prior to suffering a disability, someone will need to initiate court proceedings to be appointed your guardian and/or conservator. Until that happens, no one will be able to legally act on your behalf. This process takes time and costs money and once appointed your guardian and/or conservator will be subject to court oversight.
If you would like to learn more about durable powers of attorney or have any questions regarding your estate planning, please contact the estate planning attorneys at Monaghan, P.C.