When considering estate planning, people often think mainly about drafting a last will and testament to dispose of their property they leave upon their death. An important estate planning component to consider is who will take care of your personal well-being and finances in the event you become physically and/or mentally incapacitated. A durable power of attorney and health care power of attorney are important parts of your estate planning that many times are overlooked.

While a will disposes of your property at death, a durable power of attorney can help preserve your property while you are living, and a health care power of attorney will enable someone to make health care decisions for you if you are unable to yourself.

Many people suffer from debilitating diseases such as dementia or Alzheimer’s, which impair their brain function to the extent that they are unable to properly care themselves. In such cases, a qualified physician can declare someone to be incapacitated. Under the law, an incapacitated person does not have the ability to form a contract—so something as simple as writing a bank check or signing a consent form for a doctor’s treatment is no longer valid for someone who is incapacitate.

A durable power of attorney is a document an individual (known as the “principal”) can sign while he or she has mental capacity which enables a designated person (known as the “agent”) to contract for them in the event they become incapacitated. The agent basically steps into the shoes of the principal to enter into financial transactions, buy or sell property, or otherwise legally bind the principal into any other type of agreement.

Similarly, a health care power of attorney is a document executed by the principal to enable the agent to contract for health care, such as consent to treatment or consult with the principal’s physician to determine a course of treatment if the principal is unable to make that decision.

If someone becomes incapacitated without have executed a durable power of attorney or health care power of attorney, then the only way they can have someone act on their behalf is by having a court-appointed guardian. A guardianship is a legal proceeding overseen by the county court where such individual resides. The person for whom a guardian is appointed is known as the “ward”. The main difference between an agent under a power of attorney and a guardian is that the guardian is required to report annually to the court on the condition of the ward, and also must provide an accounting of all transactions involving the ward’s funds.

Since a guardianship is a legal proceeding, it typically involves hiring an attorney experienced in guardianship law to draft the required documents and appear in court for appointment of the guardian. Additionally, the annual reporting requirements often require the assistance of an attorney to make sure all of the rules for reporting established by the court are properly followed.

The appointment of a guardian and subsequent filing of annual reports with the assistance of an attorney can become costly over time. However, hiring an attorney-at-law to draft powers of attorney prior to an individual’s onset of incapacity eliminates the need to have a court appointed guardian in the event of incapacity later. As such, having powers of attorney in place as part of your estate planning will be less costly in the long run if incapacity develops.

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