Durable Powers of Attorney: A Helpful Tool in the Estate Planning Toolbox
Durable Powers of Attorney are often considered a standard part of an estate plan. This legal document can be an extremely beneficial tool in the event you are not able to handle your own affairs. When an unexpected need arises, having a power of attorney in place can save you and your loved ones time, money, and a lot of headaches. It can often help families avoid a guardianship proceeding, which can be expensive and time consuming. However, while this document can be tremendously helpful in some situations, it also poses great risk and should only be signed with cautious deliberation. This article explains what a Durable Power of Attorney is, provides some important things to consider when preparing it, and also highlights the risk associated with this document.
What is a Durable Power of Attorney?
A Durable Power of Attorney is a legal document in which an individual (the “principal”) names someone (the “agent”) to act for them with regard to their personal affairs. This can prove to be tremendously helpful when a principal needs help managing their day-to-day affairs. It can also be helpful when a principal is traveling or otherwise needs an agent to take some action on their behalf simply for the sake of convenience. The document can give the agent powers to act within a broad range of topics—often including the principal’s banking, investments, real estate, insurance, taxes, government benefits, electronic communications, and more. On the other hand, the document can be very narrowly tailored to only allow the agent to act with regard to one specific transaction. A durable power of attorney isn’t always a “one-size-fits-all” document. Which powers you need to grant to your agent is an important decision an attorney could help you consider based on your individual needs.
Who should be your Agent?
Perhaps the most important consideration with regard to a power of attorney is who to name as an agent. Due to the powerful nature of this document, the principal should only name an agent who they trust to always act in the principal’s best interest with utmost integrity and honesty. The agent can be a family member, a trusted friend, or even a financial institution. Because the powers granted to the agent are often broad and sweeping, and because the agent is often given access to the principal’s finances and other sensitive information, this document can sometimes be abused. Unfortunately, it is not uncommon for agents to abuse their power and take actions that are not in the principal’s best interest. Therefore, while this tool is very powerful and often helpful—it also poses enormous risk.
When should your Power of Attorney become effective?
Another important consideration in preparing this document is when it should become effective. Some principals may need the document to become effective only upon their incapacity. Others may be better served by a document that is effective immediately upon signing. Many powers of attorney expire only upon the death of the principal, but others include an earlier expiration date. When the document becomes effective and when it ceases to become effective must be carefully considered.
If you have questions about a power of attorney, contact Hudson Legal Services. Together, we can make sure your power of attorney is specifically tailored to your needs, the risks associated with this document are minimized, and you and your loved ones are ready in the event an emergency arises. Call attorney Karlie Hudson at (919) 589-3937 to schedule a consultation or contact Hudson Legal Services online. Karlie Hudson will be glad to meet with you in the Smithfield office or virtually if that is more convenient for you.
Please note, this is not an exhaustive discussion of considerations regarding a power of attorney. Additionally, the information in this article is specific to North Carolina and is for informational purposes only. It is not legal advice. You should consult an attorney about your specific legal needs.
