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Importance of Durable Powers of Attorney

Powers of Attorney on TypewriterWhen people decide to engage in estate planning, typically they focus on naming the beneficiaries of their estate and making sure their estate avoids probate when they pass away. In most cases, these concerns are addressed by the preparation of a will, a living trust and certain probate avoidance documents. Those standard documents are an important part of the overall estate planning process, however, durable powers of attorney for financial matters and health care are just as important for other reasons. In fact, regardless of whether they have an estate plan, every adult should have these two durable powers of attorney. 

What is a Health Care Durable Power of Attorney?

A health care durable power of attorney is a document in which you (the “principal”) name someone else (the “patient advocate”) to make health care decisions for you when you are no longer able to participate in the making of those decisions. This document does not take effect, or spring into action, until you have been determined to be legally incapacitated and incapable of making your own health care decisions.   

What is a Financial Durable Power of Attorney?

A financial durable power of attorney is a document in which you (the “principal) name another person (the “attorney-in-fact” or “agent”) to act on your behalf regarding your affairs. Unlike the health care durable power of attorney which only takes effect once you have been determined to be legally incapacitated, a financial durable power of attorney comes in two varieties, a “non-springing” and a “springing” variety. 

A non-springing financial durable power of attorney becomes effective immediately upon execution, which means that your agent can act for you even if you still have legal capacity. 

A springing financial durable power of attorney, just like the health care durable power of attorney, only becomes effective or springs into action when you are no longer able to act. Your agent will, in fact, be prohibited from acting until there has been a determination that you are legally incapacitated. Getting that determination of incapacity can sometimes be challenging and it certainly will not be something that your agent will be able to obtain quickly in most cases. Consequently, most people prefer the flexibility of a non-springing financial durable power of attorney because its use is not dependent on proving the principal’s disability. 

Selecting Patient Advocates and Agents.

With both the financial and health care durable power of attorney, it is vitally important that you name people who are trustworthy and who will act in your best interest when carrying out their respective duties as your agent and patient advocate. Typically, people will name family members and/or trusted friends to act in these capacities.   

Durable Powers of Attorney Are for Everyone 18 Years and Older.

Both financial and health care durable powers of attorney are critically important for all persons to have once they are of legal age, which is 18 in Michigan. This is because once a child turns 18, that child is now a legal adult and his or her parents can no longer make or participate in making financial or health care decisions for that child without that child’s consent. This can be a real problem if a child suffers a disability while away at college, for example, and hasn’t executed durable powers of attorney naming his or her parents as that child’s agents and patient advocates. In that instance, those parents could not step in and make financial and health care decisions for that child.

What Happens When There Are No Durable Powers of Attorney?

If you have not implemented financial and health care durable powers of attorney prior to suffering a disability, someone will need to initiate court proceedings to be appointed your guardian and/or conservator. Until that happens, no one will be able to legally act on your behalf. This process takes time and costs money and once appointed your guardian and/or conservator will be subject to court oversight.

Don’t Cut Corners-Hire a Lawyer.

One final but important point – as with any estate planning document, you should not attempt to prepare your own durable powers of attorney from a form you find on the internet. Those forms are generic, may not be applicable to your specific circumstances and may not comply with state law. Instead, an experienced estate planning attorney should be retained to draft these instruments. The old adage “you get what you pay for” is a great adage to adhere to when preparing durable powers of attorney and all other estate planning documents.

For questions or concerns about how this information applies to your specific situation, contact the author of this article, Jay David, or another member of our Estate Planning practice.

Categories: Estate Planning, Powers of Attorney

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