Having worked with retired and soon-to-be retired individuals for most of my career, I am very well aware that mental or physical incapacity, whether temporary or permanent, can happen at any time and can have distressing consequences not only for individual affected but also and maybe most important for the primary caregiver, whether a spouse or child. From the onset of our relationship with our client, we caution how very important and empowering it is to plan for the future as it relates to both financial and legal matters.
Steps should be taken to be sure that you can be cared for should you not be capable of acting on your own behalf. As I have written so many times before, people are so concerned about what happens to their estate upon death that they lose sight of protecting themselves during lifetime. A power of attorney should be your first option.
I will bet many of you think the general power of attorney you signed many years ago would protect you if you become mentally incapacitated? A durable power of attorney is a document that allows you (the principal) to give someone (your attorney-in-fact) the authority to act for you. Unlike a general power of attorney, a durable is not revoked automatically if you become mentally incapacitated. The durable power of attorney will remain in force until your death. Of course, during your lifetime, you can make changes as long as you have the mental capacity to do so.
The authority that you may grant a family member as your attorney-in-fact named in the durable power of attorney can be as extensive or as limited as you desire. As I mentioned above, the power of attorney can be revoked prior to your incapacity, or in the event that your incapacity proves to be temporary. Revisit your power-of-attorney from time to time to determine if you still want the person you are naming as your attorney–in-fact to serve, or if they are still able to serve.
One other very important consideration when having your lawyer draft your durable power is to decide whether or not you want your named attorney-in-fact to only act on your behalf should you become incapacitated. If that is the case, the power-of-attorney must spell out how your incapacity will be determined.
Lastly, remember that you are giving your named attorney-in-fact the power to manage your financial well-being at his or her discretion. I still believe that a durable power-of-attorney coupled with a stand-by trust offers you the most security. I will revisit the advantages of a stand-by trust in a future column.