Texas Durable Power of Attorney
Imagine that a close friend has been out for a night on the town. While heading home, your friend is hit by a drunk driver and sustains significant head injuries that will likely require a lengthy recovery.
Who will pay your friend's household bills like rent, utilities, and insurance? Who will handle his benefits from Social Security, Medicare, Medicaid, or other government programs? Who will manage (or hire someone to manage) your friend's investments, business, or rental property? Who will initiate legal actions against the drunk driver? Without his attention, will his life just fall apart?
If your friend has an Estate Plan with a Durable Power of Attorney, your friend will be in a much better position than if he does not. He could also benefit from a Medical Power of Attorney, Advance Directive, and HIPAA Authorization. Prior Will and Trust planning may also be beneficial in his current situation.
What a Durable Power of Attorney Does
A Durable Power of Attorney (aka Durable Financial Power of Attorney) is a legal document that allows you to designate a trusted relative or friend to manage your financial affairs when you need help doing so or while you are incapacitated. With a Durable Power of Attorney, your trusted relative or friend will be able act as a stand-in for you to pay your bills, pay your taxes, manage your investments, maintain your insurance, hire someone to represent you in legal matters, and more.
A Durable Power of Attorney allows the person you choose to step in for you if you suffer a serious injury or illness. A Durable Power of Attorney can also be helpful if you need someone to conduct specific financial transactions for you while you are traveling, or if you need someone to temporarily handle your financial affairs while you are undergoing medical treatment.
Without a Durable Power of Attorney, costly Guardianship proceedings may be required to authorize your loved ones to pay your bills and conduct your day-to-day financial affairs.
If a Durable Power of Attorney is ever needed, the money saved by avoiding Guardianship proceedings will likely cover the entire cost of your estate plan. However, Guardianship proceedings may still be the most appropriate course of action should you experience a severe and lasting incapacity.
What a Durable Power of Attorney Does Not Do
A durable power of attorney does not give the person you select free reign to do whatever they want with your finances. The person you select will be required to act loyally, in good faith, and for your benefit. She must avoid conflicts of interest and must not exceed the authority that you grant her. She must keep records of her actions and decisions and must provide you with an accounting of her actions upon request.
Unlike a Will, a Durable Power of Attorney is only effective while you are alive. If you die, your Durable Power of Attorney will terminate upon your death and cannot be used to manage your financial affairs. A Will, on the other hand, is only effective after you pass away. The powers granted to the Executor named in your Will can only be exercised once you die and cannot be used while you are alive. Accordingly, a Will and a Durable Power of Attorney are both necessary components of an effective estate plan.
Designating Someone to Manage Your Finances
The person you designate in your Durable Power of Attorney to manage your finances is often the same person you name as Executor of your Will. The qualities needed for both roles are very similar.
- Trustworthy. The powers granted through a Durable Power of Attorney are usually broad and sweeping. They are intended to allow the person to act as a stand-in to handle your financial affairs. Because the person you designate will be able to make financial decisions for you, he or she must be trustworthy.
- Financially Sophisticated. The duties required of the person you designate may include paying bills, filing taxes, managing investments, and more. To do an effective job as your stand-in, the person should be sophisticated enough to know how to carry out these activities. The more complicated your finances, the more financially sophisticated your stand-in must be.
- Organized. The person you designate through your Power of Attorney will need to keep records of every decision and transaction entered into on your behalf. It is helpful if the person you select is skilled in keeping records and able to stay organized.
- Local. Many of the tasks your stand-in will need to accomplish must be handled locally. For example, your stand-in may need to go to your bank, speak with your landlord, or purchase household goods and services for you. For this reason, it is helpful if the person you select lives nearby.
When a Durable Power of Attorney Can be Executed
A Durable Power of Attorney can only be executed while you have the legal capacity to do so. If you become incapacitated, due to an automobile accident or serious illness, for example, you will not be able to execute a Durable Power of Attorney. Without a Durable Power of Attorney in place, your loved ones will likely need to go to court to gain the ability to manage your financial affairs for you. This can be costly and time-consuming. Accordingly, you should execute a Durable Power of Attorney while you have the legal capacity to do so. Don't wait until it is too late.
Call Today to Schedule an Appointment
A Durable Power of Attorney that designates a person to manage your financial affairs when you need help or are incapacitated is an important element of every estate plan. Contact the Law Office of Brandon S. Glosson today to get started with an estate plan that is right for you or to add a Durable Power of Attorney to accompany your existing will.