A durable power of attorney is an extremely important estate planning tool, even more important than a will in many cases. This crucial document allows a person you appoint — your “attorney-in-fact” or “agent” — to act in place of you — the “principal” — for financial purposes when and if you ever become incapacitated due to dementia or some other reason. The agent under the power of attorney can quickly step in and take care of your affairs.
But in order to execute a power of attorney and name an agent to stand in your shoes, you need to have capacity. Regrettably, many people delay completing this vital estate planning step until it’s too late and they no longer are legally capable of doing it.
What happens then? Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, the representative must seek court permission to take planning steps that he or she could have implemented immediately under a durable power of attorney with gifting authority.
This is why it’s so important that you have a durable power of attorney in place before the capacity to execute the document is lost.
If you do not have someone you trust to appoint as your agent, it may be more appropriate to have the probate court looking over the shoulder of the person who is handling your affairs through a guardianship or conservatorship.
Because you need a third party to assess capacity and because you need to be certain that the formal legal requirements are followed, it can be risky to prepare and execute legal documents on your own without representation by an attorney. For assistance executing a durable power of attorney before it’s too late, contact the elder law and estate planning attorneys at Costanzo & Russom Law Group, LLC.