Planning
for a person’s incapacity is one of the more urgent functions of estate
planning. The estate planner has several devices available, including living
trusts and conservatorships, but the one document that should always be in place
is the power of attorney. In this way, a trusted person will be ready to act to
handle one’s financial matters whenever it becomes necessary, and upon short
notice if required. However, once the
principal loses capacity to execute the power of attorney, an important opportunity
has been lost. This is true even though the power to act under the power of
attorney would continue when that capacity is lost.
The
“principal” is the person giving the power, and the person who can exercise it
is the “agent” or “attorney-in-fact.”(This latter term should not be confused with an “attorney at law,” who
is licensed by the state to act as an attorney.The “attorney-in-fact” need not be a licensed attorney.)
A
durable power of attorney is one that either comes into effect when the principal
is incapacitated, or which goes into effect earlier and remains so when the incapacity
occurs. The power of attorney will have specific wording to accomplish these
goals. When the purpose of the power of
attorney is to enable the agent to execute a specific document or set of
documents, such as those associated with the sale of a house, the grant of
power is more likely to be nondurable. The principal does not contemplate
incapacity, and such a power of attorney remains effective only so long as the principal remains personally capable of signing the document.
