What to Know About Powers of Attorney
Related Practice: Estate Planning & Administration
Executing Powers of Attorney as part of your estate plan is highly important as a way to prepare for the possibility of a future disability. Powers of Attorney allow your designated Agent to make decisions and manage your affairs when you are incapacitated and cannot manage these responsibilities on your own. Perhaps most importantly, having Powers of Attorney in place may prevent the need for full Guardianship and/or Conservatorship proceedings in the event of incapacity, which can be onerous and expensive. Your Powers of Attorney may also be used to nominate potential Guardians or Conservators in case a Guardianship or Conservatorship is ever required.
It used to be the case that a person would execute one Power of Attorney to cover all matters, both financial and medical. While this practice isn’t unheard of today, it is much more common to see financial and medical powers broken up and dealt with in two Powers of Attorney. So, a modern estate plan should have both a General Durable Power of Attorney for matters involving assets and finances and a Health Care Power of Attorney for medical decision-making. Having separate Powers of Attorney for financial and medical decision-making serves at least two practical purposes. For one, it makes it easy to designate different Agents for financial and medical matters. Given the different subject matter, it is common for different people to be best suited for each role. Second, the documents can be more selectively crafted to include key language that banks and financial institutions, or doctors and medical professionals might be looking for, depending on the case.
While Powers of Attorney are typically thought of as being effective upon incapacity, in executing your General Durable Power of Attorney, you have the option to make it effective upon signing. A common situation where this is desired is when children are already helping their parents with bills and finances. If this is the case, an effective Power of Attorney can make it even easier for the child to help. Another benefit of a General Durable Power of Attorney which is effective immediately upon signing is that, in the event of incapacity, the Power of Attorney can be used immediately without the need to get a doctor’s note to verify incapacity has occurred. With General Durable Powers of Attorney which are effective immediately and, in fact, with all Powers of Attorney, clients should spend time with their attorney thinking about what powers should be included and what powers they are ready and willing to entrust their designated Agent with.
If you have any questions about Powers of Attorney, please contact a member of the Stokes Lawrence Estate Planning Group at (206) 626-6000 in Seattle or (509) 853-3000 in Yakima.