Think you do not have anything to leave behind? Think Again! (Part 3 of 4) – Durable Power of Attorney

Ok, so now you have a Last Will and Testament where you have directed where your assets will go after you pass away and who will be responsible for administering your estate. But who will help you during your lifetime if you become incapacitated and need assistance handing your finances? Enter the Durable Power of Attorney.

First, it is important to understand what a Power of Attorney does. A Power of Attorney allows another individual to act on your behalf in regards to your finances. That means that the individual can access your bank account, pay your bills, operate business accounts, etc. The person you give Power of Attorney over your finances is called the Attorney-In-Fact or Agent There a few different types of Powers of Attorney, including a General, Special, and Durable Power of Attorney.

A General Power of Attorney gives your Attorney-In-Fact the broad authority to handle all of your financial affairs. This is effective for when you age and have someone who you trust with the ability to handle your finances. However, a General Power of Attorney will become invalid immediately if you lose mental capacity.

A Durable Power of Attorney helps solve the issue of a General Power of Attorney becoming invalid once you become mentally incapacitated. A Durable Power of Attorney will allow the Power of Attorney to remain valid even if you become mentally incapacitated. To accomplish this, there must be express language in the Power of Attorney that indicates your intention for the Power of Attorney to remain valid even if you become mentally incapacitated. This is particularly effective if you are aging or your mental capacity is showing signs of deteriorating.

The third type of Power of Attorney is a Special Power of Attorney. This Power of Attorney is beneficial to an individual who wants someone to only handle a certain aspect of his or her financials. In a Special Power of Attorney, you have the ability to choose exactly what powers the Attorney-In-Fact can exercise. For example, you may only want the Attorney-In-Fact to manage your rental property, or handle your company’s business transactions, or handle the sale of your real estate. With a Specific Power of Attorney, you have the power to dictate exactly when and in what circumstances your Attorney-In-Fact may utilize the Power of Attorney.

A Power of Attorney, however, does not last forever. In addition to being revocable at any time, the Power of Attorney will automatically become invalid when you pass away. It is said that the Power of Attorney “dies with you”. After you pass away, the terms of you Last Will and Testament will govern the disposition of your assets, making it all the more important to have a valid Last Will and Testament.



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