When it comes to making an incapacity plan, you’ll want to be sure you have a Durable Power of Attorney for Finances.  This document lets you appoint an agent, also called an “attorney-in-fact”, who can handle banking transactions, pay your bills, and manage your property and investments for you if you ever become mentally disabled.

What Does “Durable” Mean?

But, what makes a Durable Power of Attorney “durable”?  Simply put, a Durable Power of Attorney remains effective after you become disabled. 

A Power of Attorney that doesn’t specify that it’s durable, on the other hand, is only effective while you’re of sound mind and able to manage your own affairs. 

If your Power of Attorney is not durable, then, the minute you become mentally incapacitated,  your agent loses all authority to act on your behalf.

What’s a “Springing” Power of Attorney?

So, if you have a Durable Power of Attorney, your agent can act on your behalf starting the minute your Power of Attorney is properly signed and witnessed.   So, your agent can handle transactions for you if you’re away on an extended trip, or if you’re in the hospital for surgery. And his or her authority continues if you become disabled. 

But, what if you don’t want your agent to have authority to act on your behalf until you become disabled? In that case, you’ll need to ask your estate planning attorney for a Springing Power of Attorney.  By definition, this document does not take effect until after you’ve suffered a mental disability.

We can help you determine what type of Power of Attorney is best for you.   We invite you to spend some time with us so we can help you choose the estate planning documents that are right for you – (336) 547-9999.

The Law Offices Of Cheryl David is a member of the American Academy of Estate Planning Attorneys.

There are two types of Financial Powers of Attorney: Durable and Springing.  Both allow you to appoint someone you trust, called your Attorney-In-Fact, to conduct financial and legal transactions on your behalf, manage investments for you, buy and sell property in your absence, and generally be your stand-in for the financial side of your life.  So, what’s the difference?  Timing.

Durable Power of Attorney

A Durable Power of Attorney takes effect the moment you sign it, and lasts until it’s revoked, either by your actions or by your death.  This means that if you create and sign a Durable Power of Attorney and then become mentally incapacitated, the Power of Attorney remains in effect, and your Attorney-in-Fact continues to have the authority to manage your finances and assets.

So, a Durable Power of Attorney is used for two purposes.  The first purpose, before you become mentally incapacitated, is primarily convenience.  If you need to be out of town or in the hospital, your Attorney-in-Fact can handle your bills, take care of your bank accounts, and manage any other financial transactions that need to be taken care of.

 The second purpose comes into play if you become mentally disabled. At this point, ideally, your Attorney-in-Fact can take over your financial dealings altogether, so that you can avoid the need to have a guardian or conservator appointed.

Springing Power of Attorney

A Springing Power of Attorney, on the other hand, becomes effective only in the event you have been declared mentally incapacitated.  So, your Attorney-in-Fact has the power to manage your investments, pay your bills, access your financial accounts, and do anything he or she would do under a Durable Power of Attorney, except he or she only gets those powers when you can no longer manage your own affairs.

Once you pass away, regardless of the type of Power of Attorney you have, the powers of your Attorney-in-Fact will terminate and the terms of your will or trust determine how your property is distributed.

For help with establishing your Power of Attorney documents, we invite you in for a free consultation – (336) 547-9999.

The Law Offices Of Cheryl David is a member of the American Academy of Estate Planning Attorneys.

Our Table at the VF Financial Fitness Fair

Our office had a table at VF’s first annual “Financial Fitness Fair”.  We were able to meet with so many of the great VF employees and share with them all that we can do to help them and their families be better prepared for whatever may come in the future.  Thank you to VF for hosting this wonderful event and providing us with the invitation to participate!  We can’t wait until next year!

The Law Offices Of Cheryl David is a member of the American Academy of Estate Planning Attorneys.

In North Carolina, there are two separate documents that need to be executed by the person requesting an agent. The documents are a Durable Property Power of Attorney and a Health Care Power of Attorney. If the person has a Durable Power of Attorney and doesn’t have a Health Care Power of Attorney, the best course of action is to get them to sign a Health Care Power of Attorney. If they can’t because they no longer are competent, talk to the physician and see if they will let the Durable Power of Attorney Agent make decisions before going to the expense of further legal actions.

The Law Offices Of Cheryl David is a member of the American Academy of Estate Planning Attorneys.

So many times an agent working under a Power of Attorney thinks they can start handling a person’s finances without court involvement. They don’t realize that they have a legal duty to handle the estate properly or they can be sued.
They often don’t realize that the law requires them to file a yearly accounting and final accounting when the person no longer needs the Power of Attorney due to recovery or death. One must show the clerk the receipt and distribution of all transactions made on behalf of their charge. NC General Statute Section 32A-11(b)(7). The clerk has the duty to audit, supervise and approve the agent’s work.
A recent N.C. case, In re Power of Attorney of Edwards (Lawyers WEekly No. 10-16-0235, 10 pp.), dealt with this situation.
The agent under a power of attorney paid herself $48,800 over four and a half years for personal care rendered to her disabled grandmother. The clerk found that the granddaughter had violated her fiduciary duty by failing to have the court approve the services, but found the amounts were reasonable and benefitted the grandmother allowing her to stay home. The clerk then rendered a decision allowing the granddaughter to receive an additional $500 per week for her services until her grandmother passed.
After Grandmother died the executor of the will, a grandson, filed an action against the clerk stating that she didn’t have authority to make this decision. Upon Appeal the court determined that the clerk of superior court had the authority to approve such payments.
Remember, if you are the agent serving under someone’s power of attorney you must get your expenses, receipts and distributions on behalf of the principal approved by the court.
Law Offices of Cheryl David
5606 West Friendly Avenue
Greensboro, NC 27410
www.cheryldavid.com
cheryl@cheryldavid.com
(336)547-9999

The Law Offices Of Cheryl David is a member of the American Academy of Estate Planning Attorneys.