A durable power of attorney is one of the most important estate planning documents you can have.
It allows you to appoint someone to act for you (your “agent” or “attorney-in-fact”) if you become
incapacitated. Without a power of attorney, your loved ones would not be able to make decisions for
you or manage your finances without asking the court to appoint a conservator, which is an expensive
and time consuming process.
There are many do-it yourself power of attorney forms available; however, it is a good
idea to have an attorney draft the form for you, especially since the law changed in
Connecticut as of Oct. 1 2016. There are many issues to consider and the one size
does not fit all.
The agent’s powers
The power of attorney documents sets out the agent’s powers.
Powers given to an agent’s typically includes buying or selling property, managing a
business, paying debts, investing money, engaging in legal proceedings, borrowing
money, cashing checks, and collecting debts. Some powers will not be included unless
they are specifically mentioned. This includes the power to make gifts and the power to
designate beneficiaries of your insurance policy. The power to make gifts of your money
and property is a particularly important power. If you want to ensure your agent has the
authority to do Medicaid planning on your behalf in the event you need to enter a
nursing home, then the power of attorney must give the agent the power to modify
trusts and make gifts. The wording in a power of attorney can be significant, so it is
necessary to consult an attorney.
Springing or immediate
The power of attorney can take effect immediately or it can become effective only once
You are disabled, called a “springing” power of attorney seems like a good idea, it can
can cause delays and extra expense because incapacity will need to be determined.
If the power of attorney is springing, it is very important that the method for determining
Incapacity is clearly spelled out in the document.
While it is possible to name more than one person as your agent, this can lead to
confusion. If you do have more than one person named, you need to be clear whether
both parties need to act together or whether they can each act independently. It might
make more sense and be less confusing to name an alternative agent to act in case
the first agent is unable.
Executing the power of attorney
To be valid, a power of attorney must be executed properly. Some states may require a
signature, others may require the power of attorney to be notarized, and still others may
require witnesses. It is important to consult with an estate planning attorney in your
state to ensure your power of attorney is executed properly.
Accepting a power of attorney
Even if you do everything right, some banks and other institutions are reluctant to
accept a power of attorney. These institutions are afraid of a lawsuit if the power of
attorney is no longer valid. Many banks or other financial institutions have their own
standard power of attorney forms. To avoid problems, you may want to execute the
forms offered by the institutions with which you have accounts.