(The following article is designed to give general information to common questions about Power of Attorney and is not to be considered legal advice. If you have specific questions about your particular situation, please contact an attorney.)
As our loved ones age, their mental capacities generally decline as well. With that, they will eventually need a responsible individual to care for their financial and health affairs. Whether you feel your loved one is approaching such a time soon or not-so-soon, most attorneys will agree that now is the best time to prepare a Power of Attorney document. Why? Simply put, you will save yourself a great deal of heartache and courtroom involvement if you handle the paperwork while your loved one’s mental capacity is still in tact.
There are many misconceptions surrounding this powerful document so let’s look at some common questions to help clarify the issue.
What is a Power of Attorney and why do I need it?
A Power of Attorney is a legal document that empowers someone of your choosing to act on your behalf. It’s usually restricted to a specific matter. For instance, if you wish to close on the sale of real estate in another state but you are unable to attend personally, you could assign someone else as your POA agent to sign the paperwork and close the sale. In this typical POA example, the POA ends as the specified task is completed. If the person dies or becomes incapacitated, however, the POA ends also.
Since you are looking to care for the needs of your loved one as they become deficient in doing so, you will not need a typical POA. You will need a “durable POA”. A durable POA is similar to a typical POA except that the agency relationship established remains effective even if your loved one becomes incapacitated. In the event that incapacity should occur, you can maintain your loved one’s affairs without legal interruption. As the trusted agent, you will have the power to manage things such as their investments, pay their bills, and direct medical care.
Remember, an incompetent person cannot execute a durable POA. The person granting the power must understand what a power of attorney is, what it authorizes and be aware of the extent of his or her property. This awareness must be demonstrated to the satisfaction of the notary at the time of signing. If your loved one appears confused or incompetent, the notary is legally bound to refuse the signing.
What types of durable POA are there?
There are two types of durable POA: medical and financial. They are more commonly referred to as a “durable power of attorney for health care” and a “durable power of attorney for finances”. A frequent question about the two is, “Can I just do one POA to cover both medical and financial?”. The simple answer to that is, “Yes, you could.”, but most attorneys suggest keeping the two separate. Keeping the two separate makes the job simpler for the agent. It also avoids unnecessarily revealing details of your loved one’s finances to their doctor or health provider and, conversely, offering health information to finance professionals such as CPA’s or brokers.
What doesn’t a Durable POA cover?
Durable power of attorneys are not without limits. They will not spell out the wishes of your loved one for future events. Such wishes would need to be addressed in a Living Will. The Living Will allows your loved one to specify parameters of their future care. It may include things such as whether or not to administer life-sustaining treatment if diagnosed with a terminal disease, or irreversible coma.
Many states combine the Living Will and Durable POA for Health Care” into a single document known as an “advanced health care directive”. Arizona is such a state that offers such forms. It is called the “Arizona Advanced Directive” and the forms can easily be found at www.azag.gov.
Do I need an attorney to accomplish this?
The short answer to this question is “No, an attorney is not a requirement”. You actually have several options for choosing forms in Arizona. There are Living Will and Health Care Power of Attorney forms published by the state of Arizona that you may use free of cost. They can be downloaded from the Arizona Attorney General’s Office website.
There are other acceptable forms that are valid as well assuming they adhere to state law requirements. Quicken WillMaker, for example, is an estate planning software program that allows you to fill in the blanks and spell out your loved one’s wishes. It is a great product that conforms to all Arizona state law requirements. Once the forms are completed, however, you’ll still need to adhere to the state’s signing, witnessing, and notarization rules. (See Arizona Revised Statutes §§ 36-3224 and 36-3262.)
What objection will I likely face from my loved one?
An important thing to be aware of is that a durable POA is effective as soon as it is signed. In essence, your loved one will be putting much of their future in your hands immediately. Some are not comfortable with that idea – and have opted to use a “springing” Power of Attorney which can only take effect once a specific triggering event happens – such your incapacity. However, these springing POA’s are more trouble than they’re worth and create more problems than they solve. For one, you (the agent) will need an affidavit showing the triggering event has occurred before the POA can take effect and that is quite a hassle involving doctors and lawyers. Even if you survive proving the springing event occurred and get the affidavit, you will likely have problems getting banks and investment institutions to recognize your power as the use of these forms is rare and they are sensitive to liability. The affidavit is problematic also because it can be deemed invalid in other states. The best way to overcome your loved ones inhibitions about the POA taking effect so soon is to have open conversations about the subject and build trust. Show them that they still maintain complete control of their lives until they need you to step in. And when that day comes, the transition will be seamless and less painful for everyone.
It can be a difficult topic to address with your loved one early but if a durable POA is not in place before some unfortunate debilitating event, you will likely have to go to court to get the authority to take over their affairs. Anyone who has suffered that process will undoubtedly tell you to prepare the durable POA sooner rather than later.
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