Powers of Attorney Explained
ne major area of asset protection is what happens to your money in the event of your death or if you become incapacitated.You probably want your money to pass on to your successors and not go to waste towards some expense you don’t want. Durable powers of attorney can protect your assets by granting someone else the power to make decisions on your behalf.There are two types of durable power of attorney: for finances and for health care. POWERS OF ATTORNEY FOR FINANCEA durable power of attorney for finance is a document that will give your chosen agents the power to make basic financial decisions about assets that are not funded into a trust.Once any asset is funded into a trust, the trustee has power to make financial decisions over it. If it’s not in a trust, whoever holds the power of attorney can make those decisions.For example, you buy a property today and pass away tomorrow. You’ve not had the chance to fund it into your trust, which already holds 15 properties. The trustee has power over those 15 assets, but not the property you just bought.This is why you need a durable power of attorney for finance. Whoever you grant this power to will be able to buy and sell the assets, write checks from your non-trust accounts and fund assets into your trust prior to your death to avoid probate.POWERS OF ATTORNEY FOR HEALTH CAREThe second type of durable power of attorney is for health care.In 1990, Terri Schiavo went into cardiac arrest and became incapacitated. She was declared to be in a vegetative state and couldn’t talk, breathe or eat without assistance.A long and public battle followed between her husband and her parents. Both parties loved her, but they disagreed about her wishes. Her husband claimed she had told him to pull the plug if she ever became incapacitated. Her parents claimed she told them she wanted to stay alive.Unfortunately, there was no documentation and no power of attorney.The case went to the courts, which took many years to come to a decision. Terri remained on life support for 15 years, costing her husband tens of thousands of dollars a day.Putting into place a durable power of attorney for health care allows your chosen agent to make decisions on your behalf should you become incapacitated. They can terminate life support even if you are not terminally ill.If you don’t want to let all your hard earned money go to waste paying for your life support, a durable power of attorney is what you need.
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