Draft papers for financial, health issues

Through a power of attorney, you can grant another person or other people the power to act on your behalf in certain situations. You can appoint someone to act on your behalf to do just about anything that you are legally allowed to do yourself. The person granting the power is referred to as the principal. The person who will be acting on behalf of the other is referred to as the agent, proxy or attorney-in-fact. 
  For example, if you wanted to sell your car but didn’t want to bother with it yourself, you could execute a power of attorney to allow a friend to sell the car for you. You would be the principal and your friend would be the attorney-in-fact.   
  For estate planning purposes, we are most concerned with what is called a “durable” power of attorney. The document is called durable because it is designed to allow the attorney-in-fact to act on behalf of the principal even if the principal becomes mentally or physically unable to act on behalf of himself or herself. Therefore, the durable power of attorney lasts until the principal gets better or passes away. Unless a document specifically states that it is a durable power of attorney, it has no legal effect if the principal becomes mentally incompetent. 
  As a result if a loved one becomes unable to handle his or her own health care or financial decisions, without a durable power of attorney no one else can make those decisions without first going to probate court to establish a guardianship. That can be expensive, time consuming and not very flexible. However, drafting a durable power of attorney prior to an emergency is much easier, faster, much less expensive and much more flexible. We normally recommend two documents. The first is a durable power of attorney for financial matters. The second is a durable power of the attorney for health care decisions. 
  Although there are many who would say that a power of attorney is a “boiler plate” document, with fairly standard language, there are a number of considerations that should be taken into account when drafting one. First, the person who is appointed to act for the principal should always be trustworthy and willing and able to act in that capacity. In addition, it is always helpful to appoint a successor to the attorney-in-fact in case he or she is also unable to act. The most common situation involves one spouse appointing the other and then naming one or more their children as successors.
When the principal owns real estate, it is always best to name the property and list the street address or other information specifying the location. That way a child wishing to use a power of attorney to transfer real estate owned by their parents will often deal with a title insurance company or real estate attorney reviewing the power of attorney to ensure that there is legal standing to transfer the property.  
With any power of attorney, the acts that the attorney-in-fact can perform are limited by what is listed. One act that can be beneficial to a person seeking estate planning advice is the ability to give away his or her assets. It is always important to include a specific power to transfer assets for no consideration to third parties, including the attorney-in-fact and other family members if that is the principal’s wish. 
There are many more considerations to be evaluated when preparing a power of attorney and such considerations should be reviewed with an estate planning attorney.
 
Paul A. Brule is an attorney with the firm of Walsh, Brule & Nault, P.C. in Cumberland. He can be reached at (401) 334-4545.