AN INEXPENSIVE ALTERNATIVE TO A GUARDIANSHIP PROCEEDING
Consider the following situation: your elderly parent, relative, or loved one is in failing health and can no longer independently manage his or her financial affairs. Yet, the obligations to pay bills, manage investments, file income tax returns, sort through medical claims, etc. are ongoing. How does one obtain the legal authority to act for and on behalf of that person to manage the myriad of financial matters which may arise regarding his or her assets and property?
The Durable Power of Attorney is a relatively simple, but powerful legal document which plays a vital role in planning for the possible disability or incompetence of an individual. Through the use of a Durable Power of Attorney, a competent adult (known as the "principal") may appoint another individual or individuals (known as the "agent" or "attorney-in-fact" to act in the principal's place, and on his or her behalf, to manage the principal's assets, property and financial affairs.
The scope of the agent's authority should be as comprehensive as possible to enable the agent to manage all potential aspects of the principal's financial affairs. The scope of the statutory New York Durable Power of Attorney form is very broad, covering transactions relating to real estate, stocks and bonds, banking, business, insurance estates, claims and litigations, personal relationships and affairs, military benefits, retirement benefits, making gifts, tax matters and "all other matters." If additional powers re necessary, it is possible to supplement and tailor the statutory form to meet the principal's special circumstances.
The Durable Power of Attorney becomes effective immediately upon signing, unless it is a Springing Power of Attorney that becomes effective upon the occurrence of a specified future event. The term "durable" means that the agent's powers continue even if the principal subsequently becomes disabled or incompetent. This is, of course, the time the Durable Power of Attorney is most needed.
The Durable Power of Attorney may be revoked by the principal during his or her lifetime, assuming he or she is competent. The agent's authority to act ends with the death of the principal.
The alternative to the Durable Power of Attorney is not a good one. If an individual becomes incompetent, and has not previously executed a Durable Power of Attorney (or placed all assets in joint ownership), in most cases it will be necessary to initiate a guardianship proceeding in Supreme Court for the appointment of a guardian to manage that individual's financial matters. A Guardianship proceeding is a time-consuming and costly means to obtain legal authority to manage an individual's financial affairs, and can easily be avoided in most cases by the execution of a Durable Power of Attorney.
The Durable Power of Attorney provides an effective means for an individual to select the person or persons who will step in and manage his or her financial affairs in the event of disability or incompetence. It is also an inexpensive alternative to a guardianship proceeding and should be considered as an important part of everyone's estate plan, along with a Health Care Proxy and a current Will or Living Trust.