Frugal Living    Thrift     Saving Money     Penny Pinching       Home

Frugal Living Tips and Frugal Living Articles for
Frugal Happy Families

The Frugal Library

Search Frugal and Simple Living Sites by Keyword Below

 

 

Welcome to one of the thousands of pages on Frugal Happy Families.

The Durable Power Of Attorney Every Estate Plan Needs One by Sterling Okura It is important for all adults to have a Durable Power Of Attorney. Here is an introduction to this important document. A "Power of Attorney" is a legal document in which one person gives another person the power to act for him, including the power to sign papers for him. The person who is giving the power is called the "principal." The person who will get the power is referred to as the "Attorney-in-Fact" or "agent." "Attorney-in-Fact" does not require the person receiving the power to be an attorney. Any adult can be your Attorney-in-Fact, including your spouse, children, or siblings. A "General Power of Attorney" gives broad powers to the Attorney-in-Fact, such as the power to buy and sell real estate, open and close bank accounts, sign checks, sign contracts, and in general, do anything the principal can do. The power to do only one or more specific things for a principal, like selling a certain piece of property, is called a "Special Power of Attorney". A"Durable" Power of Attorney is one that continues to work even if something happens to the principal that causes him to be unable to handle his own finances. To be "durable," a Power of Attorney must contain these words: "This power of attorney shall not be affected by the disability of the principal." A "Springing" Power of Attorney is one which will start to work only when the principal becomes incapacitated. Most Powers of Attorney which people have are Durable General Powers of Attorney. That is, they give broad powers to do anything, they can be used while the principal is still healthy, and they can be used even if the principal becomes disabled or incapacitated. However, this cannot be know by the title alone. Some Durable General Powers of Attorney are called "Durable Power of Attorney." Others are called "General Power of Attorney." Still others are called "Power of Attorney." To discover whether a Power of Attorney is "durable" or not, "springing" or not, and "general" or "special", you must read the actual words of the document. A Durable Power of Attorney is an important part of every estate plan. If a person becomes incapacitated, the Attorney-in-Fact can withdraw money from accounts to pay bills for the principal, open and close bank accounts, sell stocks or mutual fund shares, sell or rent out real estate, and do whatever else is necessary to handle the financial affairs of the principal. If a person has any assets in his or her own name and does not have a Durable Power of Attorney, there will be a problem if that person becomes incapacitated. The family members will not be able to withdraw money or pay bills for the incapacitated person. One of the family members will have to hire an attorney, go to court, and ask the court to appoint a "conservator" of the property of the incapacitated person. (The conservator used to be called a "guardian.") After the court officially appoints someone to be the conservator, the appointed conservator will be able to withdraw money, pay bills, and handle other financial matters for the incapacitated person. However, the court will order the conservator to keep careful records of every penny that comes to the incapacitated person and every penny that is spent for the incapacitated person. The conservator will have to go back to court every year, or as often as the court orders. The conservator will have to provide an accounting of all financial activity since the last accounting each time he or she goes back to court. There will be more attorneys fees and costs each time the conservator goes back to court. The conservatorship hassle and expense can easily be avoided by having a good Durable Power of Attorney, which will allow the Attorney-in-Fact to handle finances for the principal without an exact accounting and without court supervision or attorneys fees. This written advice was not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding penalties that may be imposed on the taxpayer. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice.) This column is for general information only. The facts of your case may alter the advice given. Do not rely on the information in this column without consulting an estate planning specialist. Contact a Hawaii Elder Law or Estate Planning attorney for more information.

 

 

 

The Frugal Network
Free Clipart	Frugal Happy Families	Mini Preppers	Scrappy Quilting	Simple Living Toolbox
Be warm, be safe;   save time and money.    Be frugal and be happy.

Home