Power of attorney documents are necessary for incapacity planning.
Although a trust is functional while the trustmaker is still alive, a last will and testament is only effective after death.
Assets titled to a revocable living trust could be managed seamlessly by co-trustees or successor trustees if the trustmaker becomes incapacitated. Still, any property outside of the trust would require alternative provisions.
Without incapacity planning, loved ones would have to petition the court for a conservatorship or guardianship to access and use such financial resources to pay bills.
The process can be expensive and waste precious time.
The court may even name a stranger rather than a family member to serve in these roles.
According to a recent Coeur d’Alene/Post Falls Press article titled “Power of attorney documents come in two main varieties—do you have both?” having the power of attorney documents in place can help avoid these unfortunate scenarios.
In fact, incapacity planning is an essential component of comprehensive estate planning.
Two critical documents for incapacity planning are a durable power of attorney for healthcare and a general durable power of attorney for financial matters.
Although they address different needs, these power of attorney documents involve appointing an “agent” or “attorney in fact” with the legal authority to make decisions when you cannot do so for yourself.
The amount of legal authority granted can be broad or specific.
For example, you may want your agent to pay bills but not sell property.
Because of the different purposes each serves, one should have both powers of attorney for health decisions and financial matters.
By planning ahead and having an experienced estate planning attorney draw up these documents, you can avoid costly and public court proceedings.
These proceedings tend to be public, making the general public privy to details on financial and medical issues.
For those who value privacy and who want to appoint people they trust with their financial and health care decisions, power of attorney documents are essential.
Reference: Coeur d’Alene/Post Falls Press (Oct. 11, 2023) “Power of attorney documents come in two main varieties—do you have both?”