A Durable Power of Attorney for Finance and Property is a written legal document that allows you (called the “principal”) to appoint an agent to make decisions concerning your finances and your property. Anyone over the age of 18 need this document, it is not just for elderly individuals.
The power of attorney documents may be broad and sweeping so that the agent is able to act upon everything that you are able to do for yourself. These types of documents are called “general” powers of attorney. “Limited” power of attorney allows the agent to have one or more specific powers of attorney at a particular time, the agent’s powers are limited. Durable Powers of Attorney are not affected when you become incapacitated or disabled, durable powers of attorney remain in effect during that time.
Some powers of attorneys are active immediately, once you sign the documents and others become effective when a physician determines that you are incapacitated. This type of document is called “Springing”. Other springing powers of attorney will delay the effective date until you decide when you want it to be activated, it doesn’t have to be determined by a physician.
Durable Power of Attorneys have become very popular because it is inexpensive and allows you to choose who you want to handle your finances and property without having them go to court, if you become incapacitated. Most states will accept your power of attorney even if it was not written in that state. There is a misconception that your spouse, child, or parents will be able to handle your finances and property if you become incapacitated. In reality, they would have to go to court to become your guardian.
When determining who should be your agent, it is a good idea to remember this person will be handling all of your finances. They should be good at financial decision, accounting, and math. This person will be paying all of your monthly bills so they will need additional time to do so. The agent should be trustworthy. It is always a good idea to list some or a few back-up agents in case your first agent is unable to perform their duty as agent.
These are some of the areas that the document should address: payment of bills, Banking, Insurance and annuities, Accounts, Real Estate; tangible personal property; stocks, bonds, securities and U.S. securities, Operation of entity or business, Borrowing, Taxes, Retirement plans, Benefits from governmental programs, Social Security, Medicare, Medicaid or civil or military service, Gifting of assets, Title 19 benefits, Estates, trusts, and other beneficial interests, special needs trust, WisPact Trust, Custodial accounts, Family support, Lawsuits, and Guardianship.
These types of power of attorney are effective during your lifetime, but ceases upon your death. This is very important to note because most people believe their agent may get into their safety deposit box after they pass away, but because the document terminates on your death your agent may not use it any longer. This is also true about bank accounts, property, and other financial investments. This document does not take the place of your Last Will and Testament, other estate planning tools, or designating a beneficiary on your accounts.
You may revoke this power of attorney at any time as long as you are still capacitated. You may do this by:
1. Canceling, defacing, obliterating, burning, tearing, or otherwise destroying it or, if you are not physically able to destroy it yourself, directing that another person destroy it in your presence;
2. Executing a statement in writing, signed and dated by you, expressing your intent to revoke the instrument;
3. Verbally expressing your intent to revoke the instrument in the presence of witnesses; or
4. Executing a new power of attorney.
Lesson Learned: Everyone over 18 years old needs to have a Durable Power of Attorney for Finance and Property.