Power of Attorney - Commentary - Print

ESTATE PLANNING

DURABLE POWER OF ATTORNEY

Controlling What You Can If Incapacity Strikes By David Stubblefield, CFP ® , CDFA ®

Today we focus on one of the common “tools” in your estate planning kit for dealing with possible issues of incapacity. If you are reviewing your estate plans, or simply covering the “what-ifs” with your family, here are a few options to consider regarding this important financial planning technique. David Stubblefield, Senior Financial Planner at Commerce Trust Company, takes a moment to discuss why it’s best to think ahead. Q. I AM REVIEWING MY ESTATE PLANNING NEEDS AND IT’S BEEN SUGGESTED THAT I HAVE A DURABLE POWER OF ATTORNEY SET UP IN ADVANCE. WHAT IS A DURABLE POWER OF ATTORNEY? A. There are several types of “power of attorneys,” but we will focus on the most robust, the durable power of attorney. A durable power of attorney grants another person the legal authority to act on your behalf in a general or limited capacity. The general and limited distinctions are important to understand. A general durable power of attorney gives the person you choose, also known as the agent, the power to manage all of your assets and financial affairs while you are alive. A limited power of attorney, on the other hand, allows you to give only specific powers to the agent, such as selling property, investing assets or making healthcare decisions. Q. REGARDING HEALTHCARE DECISIONS, IS THERE A SPECIAL POWER OF ATTORNEY DOCUMENT? A. Yes, it’s the healthcare power of attorney, which is one of the limited power of attorney documents. This document prevents family conflicts and possible court intervention should you become unable to make your own healthcare decisions or express your medical treatment preferences. If your condition changes, you can revoke the appointee’s privilege at any time. Parents of college-aged children at out-of-state schools also find the healthcare power of attorney helpful if a medical emergency arises. Q. WHAT DO MOST PEOPLE USE THE POWER OF ATTORNEY FOR? A. The main reason to put a power of attorney in place as we get older is to help your family reduce any financial vulnerability that might arise if you become incapacitated and can’t handle your own business affairs. “Incapacitated” is defined as loss of mental competency, which prevents you from entering into contracts of any kind. You can preempt an unwanted lapse in your financial affairs by thinking ahead. Q. WHO TYPICALLY SERVES AS A POWER OF ATTORNEY? A. Your choice of agent is critical. Besides the obvious in retaining a capable person you can trust, you might prefer someone who is philosophically aligned with your perspective on handling assets and property. Ideally,

Wealth | Investments | Planning Commerce Trust Company

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