Regardless of the size of your estate you should consider executing a durable power of attorney. A durable power of attorney simple and reliable way to arrange for someone of your choosing to manage your finances in your place as well as if you make the power of attorney durable it remains in effect even if you become mentally or physically incapacitated, either permanently or temporarily.
You choose both the nominated and the successor attorney in fact. You can choose two attorneys in fact, and designate that they must work in concert or can act separately. You can revoke a power of attorney at any time. You can choose another attorney-in-fact at any time.
Executing a durable power of attorney before you become incapacitated saves your loved ones from having to petition a court to appoint a conservator appointed over your estate - a procedure that can be a public, often costly, sometimes contentious, and time-consuming procedure – so that necessary financial decisions and /or health care arrangements can be made for your benefit.
Even if you have a trust, a power of attorney can be a helpful tool for assets that cannot be transferred into trust without tax consequences (such as an IRA) or assets that are later acquired but have not been transferred into the trust. With a durable financial power of attorney these assets can be managed by the attorney-in-fact that you choose.
There are two types of powers of attorneys: a durable financial power of attorney and a power of attorney for health care decisions
Durable Financial Power of Attorney
The durable financial power of attorney can be effective immediately upon execution or upon a future date or occurrence (such as your incapacity) of your choosing. You will also determine the scope of your attorney-in-fact’s authority, and that authority can be as broad or as narrow as your situation needs or requires. For example, with respect to life insurance policies and annuity contracts you can empower your attorney-in-fact to do any or all the following:
- Continue, pay the premium or assessment on, modify, rescind, release, or terminate a contract procured by or on behalf of the principal that insures or provides an annuity.
- Procure new, different, and additional contracts of insurance and annuities for the principal and the principal's spouse, children, and other dependents, and select the amount, type of insurance or annuity, and mode of payment.
- Pay the premium or assessment on, modify, rescind, release, or terminate a contract of insurance or annuity procured by the agent.
- Apply for and receive a loan on the security of the contract of insurance or annuity.
- Surrender and receive the cash surrender value.
- Exercise an election.
- Change the manner of paying premiums.
- Change or convert the type of insurance policy or annuity as to any insurance policy or annuity with respect to which the principal has or claims to have a power described in this section.
- Apply for and procure government aid to guarantee or pay premiums of a contract of insurance on the life of the principal.
- Collect, sell, assign, hypothecate, borrow upon, or pledge the interest of the principal in a contract of insurance or annuity.
Please note that some states require that an agent be granted specific authority to do certain things. For example, the authority to change a beneficiary may need to be specifically granted in the power of attorney document in order for the attorney-in-fact to have that authority. It’s important that you consult legal counsel familiar with the laws in your state so that your attorney-in-fact has the exact authority you want him or her to have.
In addition, other financial authorities can be granted as well including the authority over:
Real property transactions; tangible personal property transactions; stock and bond transactions; commodity and option transactions; banking and other financial institution transactions; business operating transactions; estate, trust and other beneficiary transactions; claims and litigation; personal and family maintenance; social security or other governmental program; civil or military benefits; retirement plan transactions; tax matters; digital assets (e.g. your Facebook & Twitter accounts, your online banking services, any websites you may own or manage)
Power of Attorney tor Health Care Decisions
The power of attorney for health care decisions gives your attorney-in-fact the power to make medical or surgical decisions on your behalf. This type of power of attorney is effective only when you are incapacitated and becomes ineffective when your health returns. In many states, you can also authorize your agent to decide whether to terminate life support should your doctors determine that you are persistent vegetative state. Note that some states have a required procedure for certifying someone’s incapacity to make decisions.