Power of Attorney
One of the most important documents to include in your estate plan is a power of attorney. There are different types of powers of attorney, but the durable power of attorney is one of the most common. It allows you to name someone to make decisions related to financial matters on your behalf in the event that you are unable to make them for yourself.
How Is It Different From Other Powers of Attorney?
People sometimes confuse a durable power of attorney with a medical power of attorney, but they are not the same thing. A durable power of attorney is a separate document that gives your chosen representative the power to make decisions for you in nonmedical matters, such as those related to your finances.
A general power of attorney is similar to a durable power of attorney in that it gives your representative decision-making authority in nonmedical matters. It is different, however, in that a durable power of attorney only takes effect if you become incapacitated, whereas the authority of a general power of attorney terminates in this event. A durable power of attorney is also different from a general power of attorney in that the former allows you to set greater limits on what your representative can or cannot do in your stead.
How Long Is It Effective?
This is something you will have to indicate when preparing the document. A durable power of attorney takes effect when you are no longer able to make decisions on your own behalf. This can happen under many circumstances, such as when you become disabled, slip into a coma or develop dementia. Death may be one circumstance in which a durable power of attorney is no longer effective. However, it is often a good idea to include language stating that if the incapacitation is temporary and you recover the ability to make decisions for yourself, the durable power of attorney is no longer effective.
Whom Do You Choose as Your Representative?
There are many terms for the person you name in your durable power of attorney to act on your behalf under certain circumstances. One of these is an attorney-in-fact. This name can be misleading; it does not need to be a legal professional. Other terms include representative, agent, or proxy.
Whatever the term used, the requirements vary by state. Generally, the person you choose must be at least 18 years of age. You should also choose someone with experience in financial matters whom you can trust. You usually have the option of choosing a family member, but you do not need to do so. In some cases, it may be wise to choose someone other than a relative.
It is important to craft estate planning documents like a durable power of attorney carefully so that they reflect your true wishes. An estate planning lawyer in Sacramento, CA can advise and guide you through the process. Contact a law office for more information.
Thanks to Yee Law Group for their insight into estate planning and a durable power of attorney.
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