A durable power of attorney is a legal tool that allows you to appoint someone (known as your agent or attorney-in-fact) to act on your behalf and make decisions about your financial affairs and property in the event that you become incapacitated.
What powers does it grant?
The powers you grant to your agent through a durable power of attorney are fully customizable. You might give your agent the authority to handle tasks such as:
- Paying bills and managing day-to-day expenses
- Handling banking transactions and investments
- Managing real estate, including buying or selling property
- Filing taxes and handling any financial disputes
- Applying for government benefits such as Social Security or Medicare
- Overseeing the management of your retirement accounts and insurance policies
Why Is a Durable Power of Attorney So Important?
A durable power of attorney plays a crucial role in your estate plan because it allows your agent to manage your assets even if they have not been transferred into a trust. Many people create a living trust as part of their estate plan, which allows the trustee to manage the assets that have been placed in the trust; however, the trustee has authority over only those specific assets that have already been transferred into the trust.
This is where the durable power of attorney acts as a safety net. If you forget or fail to transfer certain assets into your trust, the agent named in your durable power of attorney can step in to manage those assets for your benefit. For example, if you become incapacitated and there is a bank account or property that is not held by your trust, your agent will still have the authority to access and manage those assets.
Selecting the Right Agent
Choosing the right person to serve as your agent under a durable power of attorney is one of the most important decisions you’ll make in the estate planning process. This person will have access to your financial affairs and assets, so it’s crucial that they are trustworthy, organized and capable of making sound financial decisions. It’s common to name a close family member, such as a spouse, adult child or sibling, but you can instead appoint a professional such as an attorney or financial advisor.
Consider the following when choosing an agent:
- Trustworthiness: Can you trust this person to act in your best interests, even when it’s difficult?
- Financial Acumen: Does this person have the financial knowledge to manage your assets effectively?
- Dependability: Will this person be reliable in following through with the duties you have assigned them?
For more information or personalized assistance with estate planning, including drafting a durable power of attorney, contact Deka Law Group at info@dekalaw.com or call us at 626.765.6272.
