Whether you use a will or a living trust no estate plan is complete without a property power of attorney. This is a legally binding document in which you give the authority to another person to make financial decisions for you. A property power of attorney is not to be confused with a medical power of attorney which gives another person to make medical decisions for you. This document will be the subject of a future discussion.
Why would you want or need a property power of attorney? If you become incapacitated to the extent you cannot handle your own financial affairs, you and your family will be glad you have designated someone of your choosing to do so. The alternative is a guardianship proceeding which is costly, time consuming and sometimes humiliating.
You may also want a power of attorney even if you are competent to handle your affairs simply for convenience. For example like most couples my wife and I have purchased, sold and refinanced several properties over the course of our marriage. With a properly drafted power, only one of us has had to attend the time consuming settlements necessary to accomplish these real estate transactions.
Powers of attorney are characterized several different ways. They can be general or specific. A general power of attorney grants your agent the authority to conduct all of your affairs. A specific power grants your agent the authority to act for you only in specific transactions, such as a real estate closing. Whether general or specific, powers can also be limited to a certain time, for example when you return from an overseas trip, or powers can be valid until you revoke it.
A durable power of attorney is designed to be effective before and after your incapacity. A springing power become effective only upon a determination (usually by one or even two doctors) that you are incapacitated to the extent you cannot handle your own affairs. In most cases you would want the power to be durable but not springing. Otherwise, you would not be able to avoid the trip to the courthouse for a determination that you are incapacitated.
Usually powers of attorney are not recorded as public information at the local courthouse. However, if the power relates to a real estate transaction, it may have to be recorded at the Recorder of Deeds Office. If a person has already reached the incapacity stage, one might want to record their power because they may no longer be competent to execute another.
Elderly people in particular may want to consider naming multiple individuals either as co or alternative agents. This would guard against the possibility that the single named agent predeceases the principal or becomes incapacitated themselves when the principal is no longer competent to name another.
Powers of attorney should be executed when you sign you sign your will. If you engage an attorney to create your estate plan he or she will include this important document. If you choose not to use an attorney, there are power of attorney forms readily available on the internet.
Why would you want or need a property power of attorney? If you become incapacitated to the extent you cannot handle your own financial affairs, you and your family will be glad you have designated someone of your choosing to do so. The alternative is a guardianship proceeding which is costly, time consuming and sometimes humiliating.
You may also want a power of attorney even if you are competent to handle your affairs simply for convenience. For example like most couples my wife and I have purchased, sold and refinanced several properties over the course of our marriage. With a properly drafted power, only one of us has had to attend the time consuming settlements necessary to accomplish these real estate transactions.
Powers of attorney are characterized several different ways. They can be general or specific. A general power of attorney grants your agent the authority to conduct all of your affairs. A specific power grants your agent the authority to act for you only in specific transactions, such as a real estate closing. Whether general or specific, powers can also be limited to a certain time, for example when you return from an overseas trip, or powers can be valid until you revoke it.
A durable power of attorney is designed to be effective before and after your incapacity. A springing power become effective only upon a determination (usually by one or even two doctors) that you are incapacitated to the extent you cannot handle your own affairs. In most cases you would want the power to be durable but not springing. Otherwise, you would not be able to avoid the trip to the courthouse for a determination that you are incapacitated.
Usually powers of attorney are not recorded as public information at the local courthouse. However, if the power relates to a real estate transaction, it may have to be recorded at the Recorder of Deeds Office. If a person has already reached the incapacity stage, one might want to record their power because they may no longer be competent to execute another.
Elderly people in particular may want to consider naming multiple individuals either as co or alternative agents. This would guard against the possibility that the single named agent predeceases the principal or becomes incapacitated themselves when the principal is no longer competent to name another.
Powers of attorney should be executed when you sign you sign your will. If you engage an attorney to create your estate plan he or she will include this important document. If you choose not to use an attorney, there are power of attorney forms readily available on the internet.
No comments:
Post a Comment