The process of estate planning should be looked at from a holistic perspective. The postmortem transfer of your monetary resources is at the root, but you should also consider the interim that will precede your passing. Incapacity is quite common among elders. A comprehensive plan for aging will address this contingency.
Durable Financial Power of Attorney
Who would handle your financial affairs if you were to become incapacitated? You can answer this question yourself through the execution of a durable financial power of attorney.
Most people are aware of the fact that a power of attorney can be used to give someone else the authority to make legally binding decisions on your behalf. If you were to execute a power of attorney that is not specifically designated as durable, it would no longer be in effect if you were to suffer from incapacitation.
Durable powers of attorney do stay active even if the grantor becomes incapacitated. This is why they are used to prepare for possible incapacitation late in your life.
One advantage that you gain when you create a durable financial power of attorney is peace of mind. Hopefully, you will never become unable to handle your own affairs. However, when you have a durable financial power of attorney in place, you can go forward with the knowledge that a hand-picked decision-maker is in place to act on your behalf if it becomes necessary.
Preventing a Guardianship
A huge advantage that goes along with the creation of a durable financial power of attorney is the prevention of a guardianship proceeding. If you do nothing to record your own wishes, people around you could petition the court to appoint a guardian to act on your behalf if it became apparent that you were unable to make sound decisions on your own.
On the one hand, the fact that there is a legal mechanism in place to account for this possibility is a positive. On the other, the court could empower a guardian that you would never have chosen on your own when you were of sound mind.
Another drawback is the possibility of disagreements among your family members with regard to the appropriate choice of guardian. If there is conflicting testimony, the case can be drawn out, and important decisions can be left unmade because there is no competent decision-maker in place.
There can also be hard feelings among your loved ones during a time when they should ideally be pulling together in support of one another.
You can prevent these potential negative consequences if you work with an estate planning attorney to execute a durable financial power of attorney when you are fully capable of making sound decisions on your own.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.
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