There are numerous things to consider when you are creating an estate plan. You certainly want to facilitate the future transfer of your monetary resources, but you should also consider end-of-life issues. With this in mind, we would like to look at powers of attorney and guardianship in this post.
Court Appointed Representative
A significant percentage of seniors become incapacitated late in their lives. Some people simply cannot communicate due to devastating physical illnesses. There are others who suffer from cognitive impairment.
Alzheimer’s disease is a major threat. Around 40% of people who are at least 85 are suffering from the disease according to the Alzheimer’s Association. The United States Census Bureau tells us that the oldest segment of the population is growing faster than any other. Once you reach the age of 65, it becomes likely that you will live into your 80’s, so incapacity is a very real possibility.
If you were to become incapacitated without taking any steps to prepare in advance, interested parties could petition the state to appoint a guardian to act on your behalf. The guardian that is appointed by the court would ultimately manage your affairs.
Power Of Attorney
You could use a particular type of power of attorney to prevent a guardianship proceeding. Incapacity planning typically involves the execution of a durable power of attorney. This type of power of attorney would remain in effect even if the grantor of the power was to become incapacitated.
With a durable power of attorney, you name an agent or attorney-in-fact. This individual would be empowered to act on your behalf should you become incapacitated at some point in time.
Sometimes two different durable powers of attorney are utilized for incapacity planning purposes. There are different types of decisions that may present themselves. You may want two different people to act as your agent for these different respective purposes.
It is possible to execute a durable power of attorney for health care along with a durable financial power of attorney. One agent would make your health care decisions, and another individual would manage your financial affairs.
Matter of Choice
The major difference between a guardianship and a power of attorney is the matter of choice. If you do nothing to prepare for the possibility of future incapacity, the state could ultimately decide on a representative who will manage your affairs. You would have no control over the choice of a guardian.
On the other hand, when you create durable powers of attorney, you seize control. If you become incapacitated late in your life, hand-picked decision-makers of your own choosing would act as representatives. This is certainly a more appealing prospect to most people.
If you would like to execute durable powers of attorney, contact us to schedule a free consultation.
Parman & Easterday
- Do I Really Need an Estate Plan? - March 31, 2020
- Founding Attorney, Larry Parman, Shares a Personal and Insightful Message about the Coronavirus Situation and How the Firm is Handling It (click on the video below) - March 27, 2020
- Understanding Estate Planning – Developing a Fair Inheritance Plan - March 26, 2020