It is estimated that 50% of us will have memory issues or dementia as we age. One of the best ways to make sure you and your family are protected is to prepare a durable power of attorney for someone to make your financial decisions if you are unable to do so yourself. Not only will this give you the assurance that comes with knowing that your finances will be handled in the way you want, but also gives a great gift to your loved ones who would be thrown suddenly into the position of handling your affairs.
Who Will Control Your Legal Affairs?
When you execute a power of attorney, you give someone legal authority to act on your behalf. This person is called your "agent" or "attorney-in-fact." In order to make sure that this person can act on your behalf if you become incapacitated, you need to make sure that the power of attorney is a "durable" power of attorney. Otherwise, a power of attorney ends if you become incapacitated.
Worth its Weight in Gold
A Durable Power of Attorney can be worth its weight in gold. Creating one means that your family will not have to go through a guardianship process in the event of your incapacity. The Florida guardianship process is not easy, is fairly expensive and is avoidable in many situations by having the correct durable power of attorney in place.
Not Every Power of Attorney is Equal
A power of attorney may be more important than a will or trust. You and your family should not leave this document up to a form from the internet. We see many, many inadequate powers of attorneys cross our desk. These can leave families worse off because they may rely on it until too late.
One of the most important reasons to have the best power of attorney possible is for Medicaid Asset Protection purposes, such as creating a qualifed income trust or joining a pooled trust for Medicaid purposes. A good durable power of attorney can help make sure all of your assets do not disappear to the high cost of nursing home care. Also, a good power of attorney can help your family avoid probate by setting up a Revocable Living Trust on your behalf.
We pride ourselves with frequent changes and modifications to our power of attorney document so that it can be the best it can, leaving our clients with the best possible options to preserve their estate, avoid probate and also avoid problems.
Large Statutory Changes in 2011
As of October 1, 2011, the Florida Power of Attorney statute changed greatly. Importantly, the new law does not affect previously created powers of attorney, but we still advise the creation of a new document for practical reasons: once the Act has been in existence for a while, third persons (i.e., financial institutions) relying on a power of attorney will be accustomed to the requirements of the new Act. If a pre-October 1, 2011 power of attorney is presented in the not too distant future, it will likely come under heightened scrutiny, making it more difficult to have it honored by third persons. This would undermine the reason to have a power of attorney in the first place.
EVERY DAY we see people come into our office with a form durable power of attorney they downloaded from the internet and they are usually not done from the standpoint of Medicaid and asset protection planning. So, even though a power of attorney may be good and legal in certain respects, not all durable powers of attorney grant the right powers to protect assets from the nursing home/Medicaid planning!
Choosing Your Attorney-In-Fact
Choosing the person to serve as attorney-in-fact (your "power of attorney") should not be taken lightly. You need to be sure that they are a person who is responsible and follow any instructions that you leave. It is quite common to choose your spouse to be your power of attorney, but even in the case of a spouse, you should make sure that he or she is capable of making sound financial decisions.
You also need to make sure you name alternate agents in your durable power of attorney.You may want to name your spouse as your primary agent, for instance, but you should also consider the alternates. Name all of your children, for instance, if you trust them, in descending order.
Also, the person you name as your power of attorney has the ability to steal your assets. Here is an article about how your estate plan can help prevent elder exploitation.
Common Questions About Durable Powers of Attorney
A durable power of attorney (DPOA) is one of your most important estate planning documents. It gives an individual (your “attorney-in-fact”) power to manage your legal and financial affairs. Here are some of the most common questions we hear about durable powers of attorney in Florida.
Why is a DPOA so important?
Should you lose mental capacity without a DPOA, a guardianship will be needed to run your affairs. Guardianships are difficult, expensive, and largely avoidable with good estate planning.
How often should you update your DPOA?
You should update your DPOA about every 10 years. Financial institutions do not like older DPOAs and may refuse them when they get older. Our DPOA improves over time based on our legal experience and changes to the law.
Can any attorney or online form be used to create a DPOA?
Your DPOA should only be prepared by an experienced elder law attorney. A good DPOA allows for Medicaid, asset protection planning, probate avoidance, and the establishment of living trusts by your agent. Most online forms, or even DPOAs created by non-elder law attorneys, do not allow for advanced planning powers. A well-drafted DPOA can help protect assets from the high cost of nursing home care. A cheap form found online is no way to protect your nest egg!
Other Necessary Estate/Incapacity Planning Documents
A durable power of attorney is only one of four necessary estate planning documents. Estate Planning Documents for Everyone is a great guide to the documentation everyone needs to prepare for their death and incapacity.
Learn More About Estate and Incapacity Planning
The preparation and execution of a durable power of attorney is one of the most important legal tasks you may face. It takes considerable planning, knowledge of the law, and a thorough assessment of your situation before a document can be drafted. A good power of attorney that is carefully planned with a good elder law attorney can save your family great expense, time and difficulties in the right situation.
Give us a call and we'll set up an appointment for you to talk to us. We'll help you find the most effective and most affordable estate planning options so that our work matches your goals.