The "durable power-of-attorney" is one of the most powerful and important planning tools that an attorney can recommend to a client, not only for estate planning, but also for Medicaid and other public benefit planning.
What are they?
When a person (the principal) signs a power-of-attorney, he gives another person (the agent) the power to act in his place and on his behalf in managing his assets and affairs. The agent's powers may be broad and sweeping so as to include almost any act which the principal might have performed. It should be noted, however, that in general, acts which are inherently testamentary in nature, such as the authority to make or revoke a will, may not be performed by an agent.
A power-of-attorney can be either a "general" power of attorney, where the agent may perform almost any act the principal might have performed himself regarding the financial management of his affairs, or a "limited" power-of-attorney where the agent has one or more specific powers, such as the power to sell a particular property to a particular purchaser at a particular time. A single principal may name one or more agents who can be authorized to act either "jointly" or "severally" (alone without the signature of the other agents)
The "durable" power-of-attorney is unlike the ordinary power-of-attorney which becomes inoperative upon the incapacity of the principal. The durable power-of-attorney, provides that those powers granted to the agent shall not be affected by the subsequent disability or incapacity of the principal or by the lapse of time.
Durable power-of-attorney for Health Care is a type of power-of-attorney which delegates to the agent the ability to make a number of health care decisions on behalf of the principal, including the right to withdraw support systems, admit the principal to hospitals or nursing homes, consent to operations, allow access to medical records, etc. A Health Care Power of Attorney only becomes effective when two physicians determine the principal is no longer capable of making health care decisions for himself or herself.
Advantages for the Seriously-ill.
The use of a power-of-attorney for the management of the assets of a seriously-ill or disabled person has several advantages. It is especially useful in situations where the disabled person's assets may be modest and, accordingly, do not warrant the greater expense associated with other planning techniques such as trusts, conservatorship, or guardianships.
The greatest advantage of the durable power-of-attorney is that it remains effective after the principal's incapacity. The agent, therefore, can act immediately, upon the principal's incapacity, to manage his assets in a falling stock market or to take various emergency measures without initiating costly and time-consuming court guardianship proceedings to attain court authorization for such transactions.
The durable power-of-attorney is also a useful planning tool for married couples where property is jointly owned. When one spouse becomes incapacitated, the other acting as the agent, can avoid a court proceeding and act promptly in situations where, although assets are held jointly, one spouse cannot act alone to sell, transfer or refinance property or registered securities without having to obtain the consent of the other joint owner.