General and Durable
Should an accident or illness leave you unable to manage your own affairs, a General and Durable Power of Attorney (POA) appoints an Agent, also known as an Attorney in Fact, of your choosing to handle all of your affairs that are not directly related to health care. Arranging a POA in advance not only protects your assets and ensures that they will be managed according to your best interests, but could save your loved ones the pain and expense of unnecessary conflict and court proceedings.
What “Powers” Are Given Through a General Power of Attorney?
A General Power of Attorney gives your Agent, or Attorney-in-Fact, the ability to handle your financial affairs. This includes, but is not limited to:
- buying and selling real estate;
- buying and selling other assets;
- voting stock (which may be critical in a small corporation, limited liability company or partnership);
- writing checks;
- depositing checks;
- paying bills;
- filing tax returns;
- making and executing investment decisions;
- hiring or firing employees;
- making specific gifts;
- protecting your assets;
- entering into a contract;
- incurring debt (such as applying for and obtaining a personal loan or a mortgage);
- loaning money; and,
- generally handling your business.
Is There Any Way to Limit the Powers Granted to My Attorney-in-Fact?
Yes. While a General POA grants broad powers, you may instead choose a more limited or specific POA which confers only specific abilities. It is important to enlist the services of an experienced attorney such as Gary Stewart Seflin in drafting such a document both to make sure you understand the ramifications of the powers you grant and to ensure that the document includes proper legal language to ensure that your wishes are carried out.
In What Way Can My Agent Protect My Assets?
Should you become disabled and require expensive care, such as a nursing home, all of your assets are vulnerable to being used to pay for said care. However, with a properly drafted POA in effect, your Agent could shelter a substantial percentage of your assets by transferring or gifting them.
Who Should I Choose as My Agent?
You may choose anyone to be your Agent, but should make sure it is someone you trust to act in your best interests and to carry out your wishes to the best of his or her ability. Typically, people choose their spouse with a child or children appointed as substitute agents should the spouse be unable to act as Agent due to death or incapacity.
A single, widowed or divorced person may wish to appoint an adult child, sibling or parent to serve as his or her Agent.
Doesn’t My Spouse Automatically Get to Make Decisions Regarding Our House and Other Jointly Owned Property?
Most people expect that complete control of jointly owned property automatically reverts to the spouse when someone becomes incapacitated. The reality is much more complex. Your spouse can only control his or her share of the assets and the Court may have to appoint a guardian to represent you. This means if your joint assets need to be sold to pay for your care, there could be a considerable delay and your spouse may have to expend significant time, energy and money dealing with legal proceedings (called the “guardianship” process) before a sale is possible.
What Makes a Power of Attorney “Durable”?
Historically, a Power of Attorney is effective only until a person becomes incapacitated; however, if it is “durable”, then it remains in effect until it is revoked or until you die. In most states, the default is still to consider a POA to be non-durable unless otherwise specified. Pennsylvania is an exception, deeming all POAs to be durable unless they are clearly drafted to expire upon incapacity.
When Does a Power of Attorney Take Effect?
A POA may be drafted to either come into effect when it is signed or at a clearly defined later date, such as in event of you becoming incompetent. When it is set up to “spring” into effect in the future, it is known as a “springing” POA. Such a POA is usually triggered when a doctor signs a document declaring you to be incapacitated. Such a “springing” POA has its own draw-backs, as many financial institutions (such as banks, insurance companies, mutual funds, brokerage houses, etc.) are wary of a letter or note from a physician, which can be easily forged.
What Happens if I Do Not Have a Power of Attorney and Become Incapacitated?
If you do not have a General Power of Attorney, your family would have to go through the time and expense of petitioning the court to appoint a guardian to manage your person and your estate. You would have no say in who is chosen nor any say in how the person acts on your behalf. This may generate considerable familial conflict at a time when your loved ones are also burdened with grief over your condition, and could result in significant delays when access to your assets is needed to cover the costs of your care.
More importantly, most judges, when they sense any dispute in your family, will generally appoint someone else to manage your assets, such as the judge’s former law partner, a retired judge or another lawyer in the judge’s town. Thus, you and your family may lose control of your assets, and you would have to pay the appointed guardian as well.
May I Revoke the Power of Attorney Once It Is Given?
Yes. At any time you may revoke or amend a Power of Attorney.
Why Should I Hire an Attorney to Draft My Power of Attorney?
A Power of Attorney is a very important and delicate document, and having it drafted by an experienced Estate Planning Attorney like Gary Stewart Seflin is the only way to ensure that your wishes will be carried out and your assets handled properly in the even of your disability.
Estate Planning is too important for yourself and your loved ones to let anyone other than an experienced Estate Attorney handle your affairs. To arrange a free consultation with Gary Stewart Seflin, Esquire, call 610-892-9700 or fill out our Contact Form here.