Estate Planning Alert: Durable Powers of Attorney
A durable power of attorney is one of the most important documents to be executed as part of the estate planning process. Without a durable power of attorney, the only way anyone will be able to manage the finances of a disabled individual will be to obtain guardianship through the probate court, a process that is expensive, potentially humiliating to the disabled individual and possibly even highly contentious.
Often only the spouse is named as agent (formerly "attorney-in-fact") in a durable power of attorney. This could be a problem if the spouse is deceased or also disabled, because there will then no longer be an agent, and a guardianship will be required. Therefore, one should consider naming one or more agents in addition to the spouse. One possibility is for the durable power of attorney to provide that the second named individual does not become the agent unless the first named individual is deceased or incapacitated. The advantage is that the second-named individual does not have the power to act until the power is needed. However, this approach incurs the risk that it will be impossible to prove the incapacity of the first-named individual, in which case the successor will be unable to act. For example, in the early stages of dementia, the individual is often in denial and refuses to be examined by a physician, in which case a physician will be unable to certify incapacity, leaving a court proceeding as the only means to prove incapacity. It is often better to name agents in the alternative so that whichever named agent is most available will be able to serve, without the need to prove the incapacity of a prior-named individual.
One concern with a durable power of attorney is that third parties may refuse to accept the document if it is several years old, even though Ohio law provides that the power is "durable," meaning that it is unaffected by disability or the passage of time, unless the document statements otherwise. As an additional safeguard, it is advisable that each bank account and investment account have a power of attorney added in the records of the financial institution so that there will be no need to present a general durable power of attorney if and when it becomes necessary for the agent to access the account.
Should you have any questions regarding durable power of attorneys, please contact one of our estate planning attorneys.