Nearly everyone over age 18 should consider executing (at least) three basic estate planning documents:
2) durable power of attorney for finances, and
3) durable power of attorney for health care.
The older and more complicated your life gets (e.g. job/career, marriage, children, investments, etc.) the more important these documents become - to protect you, your family, your money and property.
This post will focus on Durable Powers of Attorney.
What is a Durable Power of Attorney?
A durable power of attorney is a written document(s) in which you voluntarily choose another person to handle some or all of your property, financial affairs, and/or health care decisions. The person you appoint is known as your "attorney-in-fact" or "agent." You are known as the "principal." The person you appoint should be someone you deeply trust.
A durable power of attorney becomes even more important specifically because it operates if or when you become mentally incapable because of sickness or injury to handle your affairs or make health care decisions for yourself.
If you have a child(ren), you can through a power of attorney can delegate parental responsibility for up to six months at a time; or appoint a guardian for your minor children, in the event you or you and your spouse are incapacitated or die. These particular clauses are important for single, married or divorced parents.
Keep in mind: a durable power of attorney can be as broad or narrow as you choose and the document is flexible to meet your individualistic needs. You can provide specific instructions in the document as to certain property you own and how you want your agent to handle it. You can provide express direction as to how you wish your property managed or invested. For example, you could give your agent authority to pay all utility bills and the upkeep on your home, but not to sell the house or take out an equity loan against it.
Many people prefer durable powers of attorney because it is essentially a private arrangement not requiring court approval. Both you and your agent should have access to the original document. You cannot file an original or a copy with the probate court; the only time a court might be involved is if there were disputes in the future.
Feel free to contact me with any questions on this or other legal topics.
Lisa J. Peterson is an attorney and mediator in Ann Arbor, MI.