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Understand the role powers of attorney play in your estate plan and get the most of out these vital estate planning tools.
USING POWERS OF ATTORNEY AS PART OF YOUR ESTATE PLAN Understand the Role Powers of Attorney Play in Your Estate Plan and Get the Most Out of these Vital Estate Planning Tools ROBERT J. KULAS FLORIDA ESTATE AND MEDICAID PLANNING ATTORNEY The right estate plan is one that incorporates all of the tools necessary to best protect your estate and meet your desires. Because no two people share the same goals or come from the same circumstances, estate plans differ widely from person to person. However, they also tend to use the same basic instruments, such as powers of attorney. A power of attorney is a kind of legal ● ● ● document. Through it, a capable adult can The person or organization you grant another person or organization name as your decision-making rights. Understanding the representative will role powers of attorneys play in your estate often be referred plan is essential if you want to get the most to as your out of these vital tools. “attorney-in-fact.” ● ● ● LAWYERS AND POWERS OF ATTORNEY One of the downsides of power of attorney is that the name itself can often lead to confusion. Powers of attorney are documents. They are not related to lawyers or attorneys. You don’t have to hire a lawyer to create a power of attorney, nor do you have to give your decision- making responsibilities to an attorney. Even though it is in your best interests to consult with an experienced estate planning lawyer if you want to create a power of attorney, there is no legal responsibility that you do so. Also, the person or organization you name as your representative will often be referred to Using Powers of Attorney as Part of Your Estate Plan www.kulaslaw.com 2 as your “attorney-in-fact.” However, that title conveys no authority to practice law. USING POWERS OF ATTORNEY Any power of attorney document you choose to create must state some very specific information. First, you will state your name as the principal. (A principal is merely someone who creates the power of attorney.) Second, the document will include your choice of agent. Your agent, or attorney-in-fact, will be able to represent your interests. The agent you select has to be an adult, but can also be an organization, such as a bank. Also, it’s usually a good idea to include several alternate agents who can act if the first cannot. Third, the power of attorney must state the types of decisions your agent is allowed to make on your behalf. Fourth, you have to sign the document, do so in the presence of two witnesses, and have the document notarized. PRINCIPALS AND AGENTS Before you can make a power of attorney you have to meet some basic requirements. To be a principal you must be an adult who is of sound mind. A person of sound mind is capable of making decisions and understanding Using Powers of Attorney as Part of Your Estate Plan www.kulaslaw.com 3 the consequences those decisions have. Also, no one can force you to create a power of attorney. If you want to create these documents, you must do so voluntarily. Like principals, agents must also be mentally capable adults. You can choose anyone you like as your attorney-in-fact, but no one is obligated to accept your appointment. If you make more than one power of attorney, you can ask more than one person to serve as your agent, as well as have more than one person serve as the alternate agent for each power of attorney you create. POWERS You can use a power of attorney to give your agent almost any decision-making authority you like. In practice, these powers usually boil down to two main types: financial and health care. Financial powers of attorney will give your agent the ability to, for example, buy property on your behalf. Health care powers of attorney, on the other hand, give an agent the ability to review your medical records, communicate with your doctors, and make decisions about medical procedures when you cannot. Using Powers of Attorney as Part of Your Estate Plan www.kulaslaw.com 4 LIMITATIONS When you create a power of attorney you choose the types of decisions your agent is allowed to make. A general power of attorney gives your agent the authority to make almost any decision you can make, and are the broadest possible powers any principal can give to an agent. Limited powers, on the other hand, impose some restrictions on the types of decisions the agent can make. A limited power of attorney might, for example, give the agent the right to only buy or sell specific types of property. A limited power might also be restricted by geographic area, subject matter, time, or any other limitation a principal chooses to impose. INCAPACITATION One of the most common reasons why people choose to create and use powers of attorney is incapacitation. If you are incapacitated you will need one or more people to make decisions for you. Powers of attorney allow you to do this. Using Powers of Attorney as Part of Your Estate Plan www.kulaslaw.com 5 Powers of attorney normally terminate if you, the principal, become incapacitated. Because powers of attorney delegate of principal’s decision-making authority to an agent, that authority ends as soon as the principal loses the ability to make decisions. However, you can create a durable power of attorney that will give your agent the authority to make decisions after you are incapacitated. These are especially important if you are preparing for possible incapacitation and need people to, for example, communicate with your doctors when you are unconscious. DEATH All powers of attorney cease as soon as the principal dies. Whether you create a durable or non-durable power, the agent no longer has the authority to make decisions for you as soon as he or she learns of your death. If you want someone to represent your estate—the property you leave behind after you die—you need to include other instruments in your estate plan. ESTATE PLANS As with all estate planning documents, crafting the power of attorney that meets your needs is not something most people can do on their own. Not only that, but powers of attorney are not something you can rely on exclusively if you want to create a comprehensive plan. Using Powers of Attorney as Part of Your Estate Plan www.kulaslaw.com 6 Though these documents have a specific, and important role in any estate plan, they cannot serve all of your needs. Creating powers of attorney that work in complement with other specific types of tools is the only way to ensure that all your estate planning goals are met. Using Powers of Attorney as Part of Your Estate Plan www.kulaslaw.com 7 About the Author Robert J Kulas Robert is the founder and principal shareholder in the Port St. Lucie and Vero Beach law offices of Robert J. Kulas, P.A. Because he believes that helping his clients manage their personal affairs wisely is one of the most worthwhile professional activities he can pursue, he has devoted his practice exclusively to estate planning. Robert has invested considerable time and energy helping to educate others in estate planning and is widely regarded as a dynamic speaker who can make even the most complex estate planning issues easy to grasp. He provides free monthly seminars to inform the public on the importance of proper estate planning. Over the past fifteen years, thousands of people have come to hear him speak. “Helping people understand their options for estate planning is very important to me,” Robert said. “I like to think that people in our community can look to me for the kind of quality information they need to decide what is best for them and their families.” About Robert J. Kulas, P.A. Attorneys at Law Robert J. Kulas, P.A. Attorneys at Law is a full service estate planning and wealth preservation law firm servicing Port St. Lucie and Vero Beach, Florida. The firm is dedicated to providing you with quality estate planning resources, so you can become familiar with all of the existing options. When you visit or call the office, we want you to feel comfortable discussing such an important issue concerning both you and your family. We want to arm you with the information you need to make an informed decision about your family's future. www.kulaslaw.com East Lake Professional Center Univest Building 2100 SE Hillmoor Drive, Suite 105 2770 Indian River Blvd., Suite 321 Port St. Lucie, FL 34952 Vero Beach, FL 32960 Phone: (772) 398-0720 Phone: (772) 778-8481 Using Powers of Attorney as Part of Your Estate Plan www.kulaslaw.com 8
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