The FAQ section found in the Estate Planning Companion answers some of the questions questions people ask most frequently about estate planning and related issues.
Topics include:
- Estate Planning Issues
- Family and Personal Issues
- Health and Medical Issues
- Other Common Issues
Family and Personal
What type of information should I prepare to assist my family if I become incompetent or die?
Many people understand the importance of having a will but fail to consider the importance of planning for the possibility of incompetence. In addition to a will, you may need a power of attorney to govern your financial matters; and a living will, health care power of attorney, or other advance medical directive that states your preferences if you are unable to give informed consent.
In handling your financial affairs, whether upon incompetency or death, your family will find that a list of your assets and liabilities will be of great importance. This may save them many hours of searching, and reduce the potential that assets may be overlooked. Also, a list of insurance policies is helpful.
You can greatly ease the burden of making such decisions, which are required on short notice, by providing a statement of your preferences regarding final arrangements, memorial services, and biographical information for an obituary.
POWERS OF ATTORNEY
What is a Power of Attorney?
A power of attorney is a convenient and powerful document used to authorize another person (known as an agent) to act on your behalf regarding financial and legal affairs. For example, a power of attorney can be used by an elderly person to allow an adult child to handle banking and financial affairs. The power of attorney can be given for a specific task, such as writing checks on a single bank account, or it can be written broadly to cover all legal and financial affairs.
What is the diference between a General Power of Attorney and a Special Power of Attorney?
A general power of attorney authorizes your Agent to act on your behalf in a variety of different situations. A general power of attorney is very broad and provides extensive powers to the person or organization you appoint as your agent. A special power of attorney authorizes your Agent to act on your behalf in specific situations only. For example, you could authorize someone to sell a car or a house for you.
What is a Durable Power of Attorney?
A "durable" power of attorney is actually a general, special or health care power of attorney that contains special durability provisions. If you become mentally incompetent while you have a power of attorney document that's already in effect, a durability provision will allow the document to stay in effect.
You can also sign a durable power of attorney document to prepare for the possibility that you may become mentally incompetent due to illness or an accident. In this case, you would specify that the power of attorney wouldn't go into effect unless a doctor certifies that you are mentally incapacitated.
How can I revoke a Power of Attorney?
Sometimes when circumstances change, you'll want to cancel the powers you granted in a power of attorney document. You can do this with a document called "Revocation of Power of Attorney." It's also possible to make a new power of attorney document that includes language that revokes prior power of attorney documents. In either case, you should present a copy of the revocation to the Agent you appointed in your original power of attorney document. If you don't, the Agent can continue to act on your behalf until he or she receives notice of the revocation. It is also a good idea to get your Agent to return the original power of attorney documents.
Who should I appoint as my Agent?
Because the agent has legal authority to act on your behalf, it´s very important that your agent be trustworthy. If at any point you become unsure about the agent´s trustworthiness, you can (and should) terminate the agent´s authority to act for you by using a revocation of power of attorney document. You should also contact banks and other parties who may have been relying on the authority of your agent.
When creating a power of attorney, it´s a good idea to name a second agent--someone who will serve as your agent if your first choice is unable or unwilling to do so.
What if my agent does not carry out my wishes?
That will depend on the terms of the power of attorney and your state´s laws. Frequently, the power of attorney will include a provision saying the agent is not responsible for losses that result from a decision he or she made in good faith. Since agents are often asked to serve without compensation, they are usually only held responsible for intentional misconduct, for example, using your funds for personal purposes.
Requiring the agent to provide you or your family with an accurate accounting of how they handle your financial affairs on a regular basis will help to monitor whether they are acting in a responsible manner.
My mother has Alzheimer's disease. Is it too late for her to create a Power of Attorney that would allow me to handle her financial afairs?
The answer to this question depends on how far the disease has progressed. If your mother is in the first stages of the disease and still understands the power that she is giving to you, the answer is probably that, she still has enough mental competence to sign a valid power of attorney.
However, if the disease has advanced to the point that her ability to make financial decisions is in question, then a power of attorney that she might sign may be invalid. In cases of doubt, perhaps a letter from a physician who has examined her can be obtained. A statement in the letter that she still has the ability to understand financial matters may be sufficient evidence to make the power of attorney valid.
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