A key estate planning element includes preparing for incapacity. For our Estate Planning clients living in Florida, a common way to do this is with a durable power of attorney. A durable power of attorney is a type of advance directive that uses legal documents to allow another person to take care of your legal, business, and financial matters in case you experience an incapacitating event or medical condition that leaves you unable to think, act, or communicate. A durable power of attorney should only be given to someone you trust.
As you consider including this type of advance directive in your estate plan, there are many advantages to using a Durable Power of Attorney, however, there are also some disadvantages that you should be aware of when assigning your rights to someone else, even when the person is family or someone you trust.
To help you make an informed decision for your life and your family, the following article features The Pros & Cons of a Durable Power of Attorney.
The Pros of a Durable Power of Attorney
- It is Easy & Economical – It is relatively easy and inexpensive to establish a durable power of attorney. Further, it protects against costly court proceedings or the need for a conservator, someone legally appointed to handle your matters in the event you become incapacitated.
- It Can be Empowering – A durable power of attorney allows you to decide in advance who will make decisions on your behalf without removing any of your rights or transferring ownership of assets. You also get to decide how much control the agent has over your care and your assets. The powers granted can be general or very specific.
- It Can Hold Agents Accountable (with Limitations) – While a power of attorney does not require the agent to become bonded or provide accounting, a durable power of attorney can require your agent to account for their transactions by keeping a record of receipts, disbursements, and transactions made on your behalf. If the power of attorney authorizes the agent to access your safe deposit box, it can also require the agent to create and maintain an accurate inventory each time he or she accesses your box.
The Cons of a Durable Power of Attorney
- You Must be Competent to Execute – You must be competent when you sign a durable power of attorney which means it can’t be executed after an issue or accident. Further, someone at any time could question your competency at the time you signed a durable power of attorney and refuse to honor it.
- There’s No Court Oversight – Usually, the lack of court supervision is an advantage, however, if and when the powers of attorney are abused, it can present an incredible disadvantage since the courts are not required to oversee a durable power of attorney.
- Ends with Your Death – In the event of your death, a durable power of attorney will no longer be valid. This document is not a replacement for the last will and testament or trust.
- It Can be Revoked or Not Honored at Any Time – Due to the lack of court oversight, not everyone honors a durable power of attorney. Some financial institutions may require specific forms, while others may insist it be relatively new (created in the last 6 months-1 year).
- You Must Be Cautiously Optimistic – It is an honor to have someone in your life that you trust enough to give them control of your decisions and assets in the event you become incapacitated. Some people accept the honor with grace, while others can take advantage of the situation. Financial struggles, addictions, and more, can cause someone to do things they would never do. Always remember that you can revoke the rights you have granted at any time in writing and the power of attorney documents can be structured to ensure the person is held accountable for their actions.
Ready to appoint a Power of Attorney?
If you think a durable power of attorney is right for you or you have questions about whether or not you should include this document in your estate plan, contact Elder Law Attorney Lisa DiFranza today!
Getting married? Check out the first article in our series for married couples – Estate Planning for Married Couples: Power of Attorney