A durable power-of-attorney represents one of the most essential planning tools for estate planning, Medicaid, and other types of public benefit planning. Upon signing a power-of-attorney, the signer provides what is known as the “agent” power to act on their behalf when it comes to managing assets and affairs.
Certain powers can be broad. However, there are certain limitations.
Powers of attorney
Two types of power-of-attorney exist:
- General – the agent can perform almost any act that the principal would have performed when it comes to the management of affairs
- Limited – The agent has select powers that may involve selling property with an agent or agents authorized to act jointly or alone without needing other signatures
A durable power of attorney involves the agent having powers granted but not affected by the disability, incapacity of the principal, or length of time.
Springing power-of-attorney is signed when the principal still has the capacity and is only triggered at the start of a disability. Challenges exist in defining a disability and conclusively determining to the third person that the affliction is conclusively established. To help facilitate the process, an agreed-upon definition of “disability” should be included in the documents for clarity and verification.
Effective and enforceable documents
Regardless of which type is selected, an effective power of attorney should include the following duties:
- Make gifts
- Establish trust funds and amend existing trusts
- Access to safe-deposit boxes.
- Sign tax returns and IRS powers-of-attorney combined with the power to settle tax disputes
- Collect financial proceeds from health or long-term care insurance
- Alter the principles home to another state that has more favorable Medicaid eligibility rules
- Renounce/disclaim inheritances or insurance proceeds
- Revoke or amend the power-of-attorney
Granting or accepting power of attorney is nothing to take lightly. It is a significant responsibility with a foundation of trust. The complexities of the process may require the help of a skilled estate planning lawyer.
