Estate Planning- The Importance of Having Powers Of Attorney

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In planning for The Unexpected it is common for most persons to consider making a will to specify what should happen with their assets after death.  There are, however, many eventualities that may occur before death for which we can ensure that we are prepared.  

Such eventualities may include loss of mental capacity, loss of physical capacity or general lack of competence to conduct one’s own affairs.   

In the event of mental or physical illness, decisions often need to be made by doctors or health care professionals regarding treatment options.  If a person lacks the mental or physical capacity to make those decisions on his or her own behalf, health care professionals need to know who they should consult.  As such, all estate planning should include planning for such eventualities.

The main way in which planning can be made for such eventualities is by preparing and executing powers of attorney for personal care and for the property.

A power of attorney for personal care will specify, not only who should make personal and health care decisions on a person’s behalf, but it may also outline what decisions should be made in particular instances. For instance, one may state whether or not one would like to be kept on life support in the event of illness, or whether or not certain types of medication should be administered.

A power of attorney for the property will specify who should have access to and manage property such as bank accounts, personal property or real estate in the event that the owner of the property becomes incapable of managing his or her affairs.  Often a power of attorney for property is needed simply because the property owner needs to travel abroad.

In accordance with the Substitute Decisions Act, certain conditions must exist at the time the power of attorney is made in order for it to be valid.  The grantor of the power must have the mental capacity to execute the document. In other words, the grantor must be in a position to make a sound judgment as to whether or not the person being appointed as attorney is genuinely concerned about that person’s welfare.   This means that if the grantor has begun to suffer from dementia or any other mentally debilitating disease, that grantor is not capable of appointing an attorney.  A power of attorney executed under the latter condition will not be valid. This underscores the importance of executing such documents when one is in good health.  

It is often assumed that powers of attorney are most beneficial to elderly persons. This is not true since anyone can become either temporarily or permanently incapable of making personal decisions for themselves.

It is very important to note that a power of attorney is only functional once the grantor is alive. Consequently, if the grantor dies the attorney no longer has the authority to handle the grantor’s property or make decisions on behalf of the grantor.  That responsibility is now transferred to the personal representative of the deceased.


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