Four Benefits of a General Durable Power of Attorney

A general durable power of attorney is a fundamental part of any estate plan. This important legal document allows you to appoint someone else to act for you to make financial decisions if you cannot make decisions for yourself.

When creating a general durable power of attorney, you are known as the “principal” and the person to act for you is called your “agent” or “attorney-in-fact.”

1. Keep Control While Allowing Someone Else to Act for You

Instead of creating a general durable power of attorney, it may be tempting to add another person as a signatory on your bank accounts “just in case something happens.” Adding someone else as a joint tenant on your bank accounts or other assets can cause you to lose complete control over what you own. Joint ownership arrangements make your asset the property of the new joint owner; and, joint ownership arrangements put your assets at risk to pay for your new joint owner’s liabilities. Don’t make your joint owner’s debts your problem. A general power of attorney allows you to appoint someone else to act for you either immediately or upon proof of incapacity without losing control. And, it requires the agent to always act in your best interest.

2. Avoid Probate Court

If you become disabled and are unable to make your own decisions, without a general durable power of attorney your family may have no choice but to petition the probate court for the appointment of a conservator. Appointing a conservator can be an expensive and time consuming process. Once a conservator is appointed, it’s usually for life. That means so long as you are alive and disabled, your conservator must provide a complete inventory of your assets and report of all of your income and expenses to the court and your family every year. What you own and what you make becomes a part of the public court records.

3. Provide for Asset Protection

If you end up needing financial assistance to help pay for long term care or nursing expenses, most power of attorney documents place handcuffs or limitations on your agent’s ability to protect your assets. When given the choice, most families prefer to protect as much of their savings and assets as possible from being spent on nursing home costs that might otherwise be paid for through government benefit programs like Medicaid. Without specific authorization to apply for government benefits or to take actions that might protect what you own, your agent may be forced to spend all of your assets on medical expenses or other costs associated with a chronic, long term illness. If your family has to go to court to get permission to act for you, there is no guarantee that the court will feel the same way you do about how to protect your assets.

4. Allow Access to Information

Putting someone else on your bank account might allow them to pay your bills from that particular account but it does nothing to allow access to financial information or medical records needed to help pay your bills, apply for government benefits or to make other important decisions. Without a general durable power of attorney, financial and medical privacy rules may prevent others from disclosing important information needed to protect you or others who depend on you for support.

If you’d like to create a general durable power of attorney please give us a call at (231) 799-4993 or contact us using the form below:

    Estate Planning in a World of Social Distancing

    The truth is that we’re living in a world of uncertainty that impacts every area of our life. Unfortunately, the fears that arise in the face of a viral pandemic do not erase the need for a careful estate planning. As restrictions on social mobility increase, it’s still possible to get answers to your planning questions in a safe way.

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    More than a year ago, our law firm adopted digital technology that allows every member of our team to assist you, as needed, by video. Our Zoom video conference platform allows us to conduct virtual face-to-face meetings with you or other members of your family with ease no matter where they are located.

    To participate by video, you don’t need much more than a smartphone, tablet, laptop or PC equipped with a camera and microphone. In real time, we can review any estate planning documents already on file in our system or to review drafts of new planning documents.

    With forced time at home, it’s a good time to review your estate planning. In our current circumstances, we recommend, at a minimum, that you have a well-crafted General Durable Power of Attorney. Because of the pressure on the medical system, it’s probably best that your Power of Attorney be one that is effective immediately rather than a springing power the requires confirmation of your incapacity by a physician.

    In addition, I recommend that you review your Durable Power of Attorney for Health Care, Advanced Directive or Living Will, if you have one. Under Michigan law, this important document allows you to appoint a Patient Advocate to make your medical treatment decisions if you are unable to make such decisions for yourself.

    If you already have a revocable living trust in place you may want to consider adding an additional trustee to your plan right now, rather than waiting until receipt of incapacity or death to allow someone else you trust to make financial or medical decisions.

    If you need someone else to aide with banking or other financial decisions, I urge you to resist the temptation to add other people as joint owners on your bank accounts or investments. With proper legal documents in place, taking the short cut of joint tenancy risks a serious loss of control over what you own.

    Although the Michigan Uniform Electronic Transactions Act (UETA) law allows use of electronic signatures for business transactions, it excludes use of electronic signatures for wills, codicils or testamentary trusts. Unless additional legal relief is provided, most estate planning documents still must be signed and witnessed the old-fashioned way with pen on paper. We’ve created several options to allow you to get your Power of Attorney, health care directive or other necessary documents updated quickly and cost-effectively.

    If you have questions or concerns about your current planning needs, please give us a call at (231) 799-4994. Or, drop us a note using the form below. We’re still here to help.