The benefits of a thorough durable power of attorney are numerous. In creating a durable power of attorney, it's important to be working with a professional that understands the challenges that life may through your way. All too often people think of power of attorney documents as just a cookie-cutter document that gives authority to manage your bank accounts if you're incapacitated, but a powerful durable power of attorney can be crucial to your and your family's future well-being.
Unfortunately, many powers of attorney are more general in nature and can actually cause more problems than they solve, especially for our senior population. A proper starting point is to emphasize that the proper use of a power of attorney as an estate planning and elder law document depends on the reliability and honesty of the appointed agent.
The person named to act on your behalf is often referred to as your "agent" (in the past, the term "attorney-in-fact" was more common).
A comprehensive power of attorney may include a grant of power for the agent to represent and advocate for the principal in regard to health care decisions. Such health care powers are more commonly addressed in a separate document known as a Health Care Power of Attorney (some states refer to it as a Health Care Proxy).
10 Benefits of a Comprehensive Durable Power of Attorney
Having covered the explanation of what a durable power of attorney is, let's look at the top 10 benefits of having a comprehensive durable power of attorney.
1. Provides the ability to choose who will make decisions for you (rather than a court).
If someone has signed a power of attorney and later becomes incapacitated and unable to make decisions, the agent named can step into the shoes of the incapacitated person and make important financial decisions. Without a power of attorney, an adult guardianship may need to be established which can be very expensive.
2. Avoids the necessity of a guardianship or conservatorship.
Someone who does not have a comprehensive power of attorney at the time they become incapacitated would have no alternative than to have someone else petition the court to appoint a guardian or conservator. The court will choose who is appointed to manage the financial and/or health affairs of the incapacitated person, and the court will continue to monitor the situation as long as the incapacitated person is alive. While not only a costly process, another detriment is the fact that the incapacitated person has no input on who will be appointed to serve.
3. Provides family members a good opportunity to discuss wishes and desires.
There is much thought and consideration that goes into the creation of a comprehensive power of attorney. One of the most important decisions is who will serve as the agent. When a parent or loved one makes the decision to sign a power of attorney, it is a good opportunity for the parent to discuss wishes and expectations with the family and, in particular, the person named as agent in the power of attorney.
4. The more comprehensive the power of attorney, the better.
As people age, their needs change and their power of attorney should reflect that. Seniors have concerns about long term care, applying for government benefits to pay for care, as well as choosing the proper care providers. Without allowing the agent to perform these tasks and more, precious time and money may be wasted.
5. Prevents questions about principal's intent.
Many of us have read about court battles over a person's intent once that person has become incapacitated. A well-drafted power of attorney, along with other health care directives, can eliminate the need for family members to argue or disagree over a loved one's wishes. Once written down, this document is excellent evidence of their intent and is difficult to dispute.
6. Prevents delays in asset protection planning.
A comprehensive power of attorney should include all of the powers required to do effective asset protection planning. If the power of attorney does not include a specific power, it can greatly dampen the agent's ability to complete the planning and could result in thousands of dollars lost. While some powers of attorney seem long, it is necessary to include all of the powers necessary to carry out proper planning.
7. Protects the agent from claims of financial abuse.
Comprehensive powers of attorney often allow the agent to make substantial gifts to self or others in order to carry out asset protection planning objectives. Without the power of attorney authorizing this, the agent (often a family member) could be at risk for financial abuse allegations.
8. Allows agents to talk to other agencies.
An agent under a power of attorney is often in the position of trying to reconcile bank charges, make arrangements for health care, engage professionals for services to be provided to the principal, and much more. Without a comprehensive power of attorney giving authority to the agent, many companies will refuse to disclose any information or provide services to the incapacitated person. This can result in a great deal of frustration on the part of the family, as well as lost time and money.
9. Allows an agent to perform planning and transactions to make the principal eligible for public benefits.
One could argue that transferring assets from the principal to others in order to make the principal eligible for public benefits--Medicaid and/or non-service-connected Veterans Administration benefits--is not in the best interests of the principal, but rather in the best interests of the transferees. In fact, one reason that a comprehensive durable power of attorney is essential in elder law is that a Judge may not be willing to authorize a conservator to protect assets for others while enhancing the ward/protected person's eligibility for public benefits. However, that may have been the wish of the incapacitated person and one that would remain unfulfilled if a power of attorney were not in place.
10. Provides peace of mind for everyone involved.
Taking the time to sign a power of attorney lessens the burden on family members who would otherwise have to go to court to get authority for performing basic tasks, like writing a check or arranging for home health services. Knowing this has been taken care of in advance is of great comfort to families.
This discussion of the Top 10 Benefits of a Comprehensive Power of Attorney could be expanded to include many more benefits. Which benefits are most important depends on the situation of the principal and their loved ones. This is why a comprehensive power of attorney is so essential: Nobody can predict exactly which powers will be needed in the future. You need a robust plan that can weather any storms that may arise. Please contact us at 919-443-3035 us if we can be of assistance in any way or if you have any questions about durable powers of attorney.
Related Links: Series on Durable Power of Attorney, Incapacity, & Adult Guardianship