A power of attorney is a legally binding device that is used across the legal field for multiple different purposes. You would utilize a power of attorney to give someone else the power to act on your behalf in a legally binding fashion.
The person who is creating the power of attorney is called the principal or the grantor of the device. The grantor names an agent or attorney-in-fact. This person is given the power to act on behalf of the grantor.
There are different types of powers of attorney. Let’s look at some of them, with an emphasis on the durable power of attorney.
General Power of Attorney
When you create a general power of attorney, you give your agent sweeping power to act on your behalf. For the most part, the agent could enter into any agreement that you could enter into for yourself.
This is a great deal of latitude to give another person. You should certainly be very discerning when you are granting a general power of attorney. However, there can be reasons why you simply cannot act on your own for a broad variety of purposes, and a general power of attorney may be called for under these circumstances.
Limited Power of Attorney
One can also grant a limited power of attorney. In a very real sense, the device is self-explanatory: With a limited power of attorney, you give the attorney-in-fact limited power to act on your behalf.
The extent of the limitations would be entirely up to you. It would be possible to give the agent the power to enter into certain types of contractual agreements on your behalf. You could alternately give the agent the power to act for you in a comprehensive manner for a limited period of time.
A limited power of attorney can be granted for a single transaction if this is your choice. Once again, the extent of the power that you bestow to the agent is entirely up to you.
Durable Power of Attorney
Our firm specializes in elder law and estate planning. In our area of the law, durable powers of attorney are often utilized.
Durable powers of attorney are used for incapacity planning purposes. A very significant percentage of senior citizens become unable to handle all of their own affairs when they reach an advanced age.
There are many different causes of incapacity, but Alzheimer’s disease is a very real and present threat. According to the Alzheimer’s Association, the disease strikes somewhere in the vicinity of 45 percent of the oldest old.
In geriatric parlance, the term “oldest old” describes the segment of the population that is at least 85 years of age.
If you did not take any steps in advance to prepare for possible incapacity, a conservatorship hearing could be convened. Interested parties could ask the state to appoint a conservator to manage your affairs.
You would have no control over the decisions of the court, and this is not going to sit well with many people.
When you create durable powers of attorney, you name decision-makers of your own choosing to act on your behalf in the event of your incapacitation. You could execute a durable financial power of attorney for financial matters, and a durable health care power of attorney for medical decision-making.
The existence of these documents would prevent a conservatorship.
We should point out the fact that the “durable” designation is important. This type of power of attorney does remain in effect even if the grantor becomes incapacitated.
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When you digest the widespread nature of Alzheimer’s disease, you can see why it is important to embed an incapacity plan within your broader estate plan. If you have not yet executed your durable powers of attorney, you are putting yourself and your family at risk.
Plus, there is also the matter of nursing home care. If you become incapacitated due to Alzheimer’s induced dementia or for some other reason, you may require more care than your family can give you.
Nursing homes are extremely expensive, and Medicare does not cover the custodial care that nursing homes provide. Medi-Cal is the solution for many, but it takes careful, informed planning to gain eligibility, because, without careful planning, you can’t qualify if you have more than $2000 in countable assets in your own name.
As you can see, action is required if you want to be prepared for the future. Our firm can help if you are ready to get started. We offer consultations, and you can call us at 916-437-3500 or send us a message through our contact page to set up an appointment.