The Importance Of A Durable Power Of Attorney
There are two main things basic estate planning is supposed to plan for: death and incapacity. The importance of planning for incapacity tends to get forgotten, probably because people have more experience with someone they know dying (death is 100% guaranteed after all) and less so with the burdens a family would face if a loved one became incapacitated. Incapacity is one’s inability to manage their own affairs because of physical or mental health matter. Practically speaking, they cannot do their banking, they cannot sell their property, they cannot borrow from their 401K, they cannot sell their stock, all because they lack capacity to do so.
What is your spouse becomes incapacitated? Can you afford your home without his or her income? Did you know that you would not be able to sell a home that you own with your spouse without his or her signatures? But what if they could not sign because of a physical or mental condition? What if you had to downsize? What if you needed to sell your home to have money for his or her care? Just to get by? Help your kids with college?
Your options would be to stay in the situation you cannot manage or apply to a court to be appointed a guardian of your incapacitated spouse’ property. This means you have to ask the court permission to sell property and account to the court annually on how that money was spent for your spouse’ benefit. Guardianship costs money and it is an intrusive process.
Durable Power of Attorney is a very powerful document that would help you avoid practical issues associated with incapacity. You can designate your spouse or any other competent person to be able to step in and act on your behalf. This document would be invaluable if a loved one became incapacitated. Your family affairs would remain private and you would have control over how your family matters and finances are handled.
Ask me about a Durable Power of Attorney!