How Well Do You Know Your Power of Attorney?
May 29, 2009
Imagine for a moment that you (or you and your spouse) are in a car accident, knocked on the head, and suffer brain injuries great enough to put you into a coma for 2 weeks and require a full seven months of nursing and rehabilitative care. Thankfully, you make a full recovery of all your cognitive powers; but in the meantime, who has been taking care of all of your responsibilities? Have you lost your home because nobody was paying the bills? Did you end up in a sub-standard recovery facility because nobody could sign the nursing home contract on your behalf? Do you have a living trust that addresses this situation but was never brought into play because it languished in a safe deposit box to which nobody had access but you?
An essential part of any trust or estate plan is the execution of a Durable Power of Attorney. This is the document that gives your nominated agent the power to do all of the things you would normally do: sign legal documents, write checks, access safe deposit boxes, and more. A Power of Attorney—if it’s done right—is an extremely comprehensive document (as described in this article in the New York Times), and as such can make many clients nervous about signing it. Does this mean you should go without? Absolutely not! Note: the Times’ article is based upon New York law, but it does have a message for all:
“…Even if signing a power of attorney makes the client feel vulnerable, it’s far better than living without one. If you become incompetent, you lack the capacity to make legally binding commitments. Without a durable power of attorney, your family might have no choice but to ask a court to appoint a guardian to oversee your finances. This can be an expensive and sometimes embarrassing ordeal and can involve unpleasant, even acrimonious, exchanges.”
Trusting another person with such power may be difficult, but the alternative can be far worse. Executing a power of attorney doesn’t have to be a nerve-wracking ordeal; talk to your lawyer about your concerns, work with him or her to choose an agent with whom you feel comfortable, and discuss the circumstances in which a power of attorney might be necessary. The last thing you want is for your home and finances to deteriorate because you were out of commission for a couple of months, and this is exactly what a power of attorney is designed to prevent. And remember: in California, it should be designated as “durable” , which means it survives your incapacity, as that is when you will need it most. If it is not created to be ‘durable’, your agent may have difficulty using it just when it is most needed, and its primary purpose will have been lost.
The Most Important Part of Your Estate Plan
April 7, 2009
What is the most important component of an estate plan? This is a question that comes up a lot in our practice, and as you might guess, different families will have different answers.
The Trust: Many families feel that this is the heart of the estate plan, and as such the most important part. As the document that outlines your wishes for distribution amounts, designates beneficiaries, nominates trustees, defines your incapacity and lists your assets—there is definitely reason to think the trust an important part of your plan.
Healthcare Directive: Some people are more concerned with how their end-of-life wishes are carried out than with the distribution of their estate. Those people consider the healthcare directive—the document that sets out your wishes for medical treatment, resuscitation, and healthcare agents—the most important component of an estate plan.
Guardianship Documents: Parents of young children are often more concerned with the guardianship portion of their estate plan than any other portion; they trust that as long as their children are in the hands of loving and responsible guardians all the rest is secondary.
The Will: Some believe the will to be the most important document. This is especially true of single people at the older or younger end of the spectrum, who feel they don’t have enough assets to require a trust.
Powers of Attorney: Very few people feel this document by itself is the “most important”, but most people understand that as the document that confers fiduciary powers on your chosen agents, the Power of Attorney has an importance of its own.
These components are all helpful and necessary pieces of an entire estate plan, but the most important part of your estate plan is something else entirely; something grantors and beneficiaries, rich and poor, young and old, attorneys and clients alike can all agree on—the most important part of your estate plan is creating it!
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