1. What is a Durable Power of Attorney?
It is a piece of paper that gives a person of your choosing permission to discuss and make financial and some legal decisions on your behalf. This document is used when you, because of illness or accident are deemed incompetent and are unable to communicate these decisions for yourself. Think of it like a set of instructions about who can, and to what extent they can, manage your income and assets when you are “away” because of illness or incapacity.
2. What is the “person of my choosing” called in a Durable Power of Attorney?
The person you give the authority to make financial decisions on your behalf is called “Attorney in Fact.”
3. When can the Attorney in Fact start making the financial decisions listed in the Durable Power of Attorney?
A Durable Power of Attorney remains in effect even if you are later unable to make decisions regarding your financial affairs due to illness or an inability to communicate. For example, say you go away on a trip and sign a Durable Power of Attorney giving your sister the right to sign checks. If you are in an accident and suffer a head injury, your sister, as your Attorney in Fact can sign checks or otherwise access your bank account to pay for your medical care, transportation home, or for any other reason that cash is immediately necessary.
4. How is it different from a Power of Attorney?
A Power of Attorney that does not contain the word “durable” is only good while you are healthy and mentally competent. If you become mentally disabled, the authority given under the regular power of attorney terminates. For example, a business owner may sign Power of Attorney giving an employee (the Attorney in Fact) the right to sign corporate checks while the owner is on a business trip. If while on the business trip, owner is in an accident and suffers a head injury, that employee’s ability to sign corporate checks or otherwise access the company bank account terminates.
5. What are some examples of financial decisions an Attorney In Fact can make under a Durable Power of Attorney?
- To pay your current bills and debts.
- To open and your close checking and savings accounts, sign checks and, deposit and withdraw funds.
- To prepare, sign and file your income tax returns.
- To hire an lawyer on your behalf.
- To deal with all retirement plans such as IRAs, life insurance Keogh plans, pension and profit sharing plans.
- To use your funds to provide for your maintenance, transportation, and necessary medical, dental and surgical care, hospitalization and custodial care.
- To maintain, change and/or establish your residence and to preserve any homestead or principal residence exemptions under federal or state law.
- To maintain, repair, improve, manage, insure, and rent out your real estate
- To exercise your voting rights with respect to any condominium, condominium association, condominium trust or real estate cooperative.
6. I’m not rich. I don’t own any property and don’t make a lot of money. Why do I need a Durable Power of Attorney?
Unless you live a “cash only” existence, if you become mentally incompetent, there will be instances when your loved one will need written authorization to deal with your finances. The need may be something simple, like contacting your credit card company to see how much is owed or writing a check to your landlord to make sure you are not evicted for non-payment of rent.
7. If I have a Durable Power of Attorney do I still need a Will and a Health Care Proxy?
Yes, a Durable Power of Attorney only provides authority to make financial decisions. A Health Care Proxy is the document that provides authority to make medical decisions. In addition, once you die, the authority under a Durable Power of Attorney expires and any future financial decisions will be made in accordance with the terms of your Will. As you can see, all three of these documents work in tandem to make sure that you have control over your body and your money no matter what.
The Law Office of Frank V. Grimaldi, P.C. is a Cambridge, MA Family Law & Estate Planning Law Practice. We help you care for your family: Guardianships, Trusts, Wills, Probate, Disabilities Planning, & more.