Durable Power of Attorney – What it Is, Why You Need It
New York Estate Planning Newsletter
A Durable Power of Attorney allows a trusted person to act on your behalf when you cannot act for yourself.
A Power of Attorney is a legal document by which an individual gives another person the authority to make decisions and conduct transactions on his or her behalf. The person giving the authority is called the Principal, and the person receiving the power is called the Agent or attorney-in-fact. When created correctly, the Power of Attorney gives the Agent a broad range of powers to handle a wide variety of legal and financial matters on behalf of the Principal in many different contexts. The person selected as the Principal must be chosen with considerable care. There must be complete and total trust between the Principal and the Agent. Typically, spouses name each other as their Agents. The Principal may also want to consider appointing an alternate Agent, in case something should happen to the primary Agent. Both a Power of Attorney and Durable Power of Attorney are effective when signed
A “Durable” Power of Attorney is different from a simple Power of Attorney. A Power of Attorney terminates upon the death or disability of the Principal. The Durable Power of Attorney remains in effect if the Principal is incapacitated. It is an especially important provision, especially when the Principal is elderly or has health issues. The “Springing” Power of Attorney becomes effective only if the Principal is deemed incapacitated. At first glance, the Springing Power of Attorney seems preferable as it “springs” into effect only in the circumstances that it was primarily intended for -- the incapacity of the Principal. However, to take effect, a physician has to certify the Principal is incapacitated. This can leave an Agent unable to act when needed. Additionally, a Springing Power of Attorney can lead to additional problems as third parties can be reluctant to accept them.
New York law provides an actual short form Power of Attorney that can be used. The form includes a list of powers granted to the Agent and includes a catch-all phrase “all other matters.” The list includes real estate, banking, insurance and estate transactions as well as retirement benefits and tax matters. The Principal may grant the Agent all of the listed powers or only limited, specified powers. However, powers granted under the form are not sufficient. For example, if a spouse is named Agent, they cannot transfer any assets to themselves. This power must be specifically stated in the Power of Attorney. It is not in the standard form.
You should have a qualified Elder Law attorney prepare the Power of Attorney to assure that it fits your needs. There are numerous areas not covered by the standard form. Among the powers that can be included are matters involving Medicaid and other government benefits authority to apply for and claim government benefits, and an authorization to make gifts and transfers as part of the process of planning to become eligible for benefits. If there is no Power of Attorney or it does not contain special provisions, the results are expensive, time-consuming and can create emotional and financial hardship for all involved. A family member may have to commence a guardianship proceeding to have a legal guardian appointed. This process requires court appearances and a thorough investigation by Court appointed examiners. If a guardian is appointed following a hearing, from that point on, the guardian must file a report with the court annually.
A Durable Power of Attorney is, next to a will, the most important legal document you should have. Having a Power of Attorney tailored to you and your family can make the difference between preserving assets and losing everything.
The Law Office of Stephen J. Silverberg, P.C. provides elder law and estate planning legal services to clients throughout metropolitan New York and New York City including the communities of Long Island, Brooklyn, Queens, Manhattan, Roslyn, and Roslyn Heights.
Please contact the firm if you or a family member is in need of legal assistance with New York Trusts and Estate Planning, New York Elder Law, New York Special Needs Planning or New York Business Planning and Wealth Preservation.
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