For most people, the durable power of attorney is one of the most important estate planning tools available. A power of attorney allows a person of your choosing, known as your proxy or attorney in fact, to act on your behalf for financial purposes if you become incapacitated. It can also be used as a medical power of attorney to appoint someone to make medical decisions on your behalf should you no longer be able to do so on your own. Note that New York State has enacted a Health Care Proxy law that requires a separate document be prepared appointing a proxy as your health care agent.
If you are no longer able to handle your affairs on your own, the person you choose will be able to step in and handle them for you. Without a durable power of attorney, no one can represent you, unless you go through the intrusive process of conservatorship or guardianship. Not only does that court process take time and money, but the control is now out of your hands. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that could be implemented immediately under a properly drafted durable power of attorney.
A power of attorney may be as limited or general in scope as you wish it to be, which is an issue that should be addressed with your estate planning attorney while creating the document. A limited power of attorney may be as specific as to be enacted only during a certain timeframe to sign a document on your behalf, or it may be more general, allowing someone to handle paying bills for you. A general power can be much more comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.
A power of attorney is classified as either immediate or “springing.” Many powers of attorney take effect immediately upon their execution, even if they will only be used in the event of incapacitation. However, the document also can be written so that it does not become effective until a triggering event, such as an incapacitation, occurs. In this case, it is critical to specify the standard for determining incapacity that triggers the power of attorney.
Work with an estate planning attorney to get this important document in place, and to make sure you have an estate plan created that meets your specific needs and goals.