The Importance Of Durable Powers of Attorney
What happens if you or a loved one is unable to make crucial financial decisions because of illness or the lack of mental capacity to do so?
Without a document which provides that someone else has the legal authority to step in and make those decisions, it may be necessary to go to court and obtain a conservatorship of the person’s estate. This is an expensive and time consuming process that most often can be averted if a durable power of attorney was created in advance.
What Is A Durable Power Of Attorney?
A power of attorney is a written document in which the maker (the principal) designates another person (the agent or attorney-in-fact) to act on the principal’s behalf. The document is called “durable” because even though the principal may lose mental capacity, the document remains in full force and effect.
A durable power of attorney for management of property and personal affairs is a very important part of estate planning. It is one of the tools that can be used to manage or administer the estate of a person who lacks the ability to do it for themselves.
A properly drafted durable power of attorney (DPOA) can also be used in the process of making someone eligible for Medi-Cal. It is critical that a DPOA have provisions allowing the agent to make gifting decisions on behalf of the person who lacks mental capacity and may need skilled nursing care. Otherwise, it may be necessary to file for a conservatorship or other court process to authorize the gifting process. If not done properly, gifting of a person’s assets might look like elder financial abuse and create a whole host of legal problems including the potential for criminal prosecution.
Drafting A Power Of Attorney
The Mullin Law Firm in Concord and Walnut Creek, California, works with individuals, couples and the relatives of loved ones to create effective and appropriate powers of attorney that work in a coordinated fashion with other parts of an effective estate plan.
The person who acts in the capacity of the agent or attorney-in-fact on behalf of someone who lacks mental capacity to manage their own financial affairs has a fiduciary duty to that person to act in their best interest. The agent or attorney-in-fact is subject to severe scrutiny when handling the other person’s assets.