Incapacity planning should be part of the equation when you are planning your estate. Of course you want to arrange for the transfer of your monetary assets after you die. But what about the period of time that will precede your passing? You should prepare for latter life contingencies as well.
Many people become incapacitated to one extent or another before they pass away. If you were to become unable to handle your own financial decision-making, who would act on your behalf?
You can answer this question by executing a legally binding document called a durable power of attorney.
A standard power of attorney that was not designated as durable would not remain in effect if you were to become incapacitated. This is why durable powers of attorney are used for incapacity planning purposes.
When Is It Effective?
When you execute any type of power of attorney it is generally going to become effective as soon as you sign the document. However, you could prescribe a certain date upon which the power would commence.
When it comes to incapacity you cannot set a date, because you don’t know if or when you will become incapacitated. At the same time, you may not want to give someone the immediate authority to act on your behalf even before you become incapacitated.
One possible way of accounting for this would be to execute a device called a springing durable power of attorney. A springing durable power of attorney would “spring” into effect only upon the incapacitation of the grantor.
This can sound like a perfect solution, and it may well be the right choice for you. However, there is a reason to take pause.
The reason why you are executing the power of attorney is to make sure that you have a trusted decision-maker in place to act on your behalf if it becomes necessary.
With a springing durable power of attorney interested parties must provide proof of your incapacitation. The agent would not have the power to act on your behalf unless the court agreed that you were in fact incapacitated.
On the one hand, this provides a level of protection. On the other hand, you did choose a representative that you trusted implicitly. Loved ones want the power of attorney to spring into effect because someone is needed to handle your affairs.
It can take time to prove that you are incapacitated. This can add a layer of difficulty that could be avoided if you were to use a durable power of attorney that was not springing.
Incapacity Planning Consultation
Incapacity planning is a must for all responsible adults. If you would like to take action, contact our firm to schedule a free consultation.
- How to Maximize the Benefits of Charitable Gifting in Your Estate Plan - February 14, 2024
- 2024 Medicaid Guidelines for New York Seniors - February 7, 2024
- Young Adults and the Importance of Estate Planning - January 31, 2024