Durable Powers of Attorney
A Durable POA is effective even if the principal later becomes incapacitated. A non-Durable POA becomes useless. At Estate Crafters we generally always prepare durable POAs.
Who Needs a POA?
Assigning Powers of Attorney is important to anyone who is concerned about who will handle their financial affairs should they ever become disabled or incapacitated.
What if you don’t have a POA?
If a person does not make prior arrangements to set up a Trust or sign a POA and later becomes disabled, formal guardianship (or conservatorship) proceedings in Probate Court is usually the only alternative. These proceedings can be time-consuming, costly and cumbersome. Also, a person’s financial information may become open to the public as Probate records and the disabled person often has no input into who serves as his/her guardian (or conservator).
A “Poor Man’s Trust”
A Durable POA is sometimes referred to as a “Poor Man’s Trust” because, when prepared in advance of a disability, it can eliminate the unnecessary cost and time required by a Probate Court proceeding. At Estate Crafters we always recommend a durable POA to complete a person’s estate plan.
What Authority Can a POA Grant?
A POA can grant whatever financial powers a person chooses to give his/her Attorney-In-Fact. Just about any type of transaction may be covered: real estate, securities, banking, insurance, even gifts. A POA can be drawn narrowly for just one transaction or broadly to cover virtually all of one’s financial affairs.
What Doesn’t a POA do?
A POA cannot authorize the Attorney-In-Fact to make medical decisions. A person must nominate an agent from their Healthcare Directive, POA or “Living Will” to do this. A change of residence is also beyond the scope of a POA, as well as protection of one’s Estate against exhaustion from nursing home expenses. A POA contains no asset distribution plan and it is not a substitute for a Will or Trust.
What If I have Real Estate Outside Minnesota?
If a person has any real estate outside of Minnesota, bring this to our attention. Separate and costly guardianships could be required in each state without proper planning. A “Common Law” POA, however, could avoid such problems.
Is a Power of Attorney Revocable?
The principal can revoke a POA at any time. A POA may only become permanent should the principal become incapacitated.
Who Should be your Agent or Attorney-in-Fact?
Your Agent or Attorney-in-Fact (A-I-F) should be a person you trust with your money. Married persons typically name their spouse first and trusted adult children second, third etc. You may also name a friend or a bank with Trust powers.
