Vital Part of Estate Planning

It is important that each adult in the United States have four legal documents. One of these is a "durable power of attorney". The durable power of attorney is just a form agreement used as part of an individual’s estate planning.

The durable power of attorney allows another person to take over control of the individual’s assets and business affairs when the individual becomes incompetent or otherwise unable to manage for him or herself. After executing a durable power of attorney, you would be termed the " principal" in the agreement and the person granted controlling authority would be known as the "agent". A "durable" power of attorney is distinguished from a "general" power of attorney, because it has a provision in it that says that the powers of the agent will endure beyond the incompetency of the principal. If you were to be judged incompetent, a general power of attorney would become ineffective. It finally became obvious that a power of attorney is even more important if a principal cannot function. Therefore, congress passed laws that provided for the power of attorney to have validity beyond the incompetency of the principal.

The durable power of attorney is equally important to the use of a will or revocable living trust, even though it may receive less attention. You are more likely to be rendered incompetent and unable to manage your financial matters than you are to die within the next few weeks. Dealing with a dead person’s assets is usually easier than having that person declared incompetent and managing their assets while they are alive.

Without the durable power of attorney, a family will have to have a court proceeding to have a family member declared incompetent and someone appointed as their agent or "conservator". A durable power of attorney should contain an important clause that will be used to determine when an individual is incompetent. A well written power of attorney will allow power to transfer smoothly to the agent without any court involvement. If two medical specialists affirm that a person is incapable of managing their financial affairs, this will usually satisfy the requirements in most durable power of attorney forms. Usually, a principal will specify that some combination of trusted family members, a religious advisor, or medical specialists can be used to sign off on their incompetency.

A principal’s affairs will be well taken care of if appropriate powers are given to the agent in a durable power of attorney. A person acting as agent under a durable power of attorney can help with not only financial and medical issues, but also religious and social matters of concern to the principal. One type of durable power of attorney only deals with medical issues; therefore it’s called a "medical durable power of attorney". Today, the durable power of attorney, medical power of attorney, Health Insurance Portability and Accountability Act (HIPAA) agreement, and living will can all be combined into one big document or broken up into separate documents.

Every adult in your family should have a durable power of attorney. Choose the form or arrangement that best fits your needs. Keep your signed forms available if problems arise. A durable power of attorney can come to the forefront and save you time, money and aggravation at the time of a family or individual hardship.

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