What would happen to your finances if you were in a terrible car accident and ended up either temporarily or permanently mentally incapacitated? Who would pay your mortgage and your health insurance? Who would make sure that you investments do not suffer? Estate planning is not just making a will and other decisions related to what happens to your estate after you pass away. Part of estate planning is make decisions related to your finances and personal well-being should you one day find yourself unable to manage your own affairs. One important document related to such planning is a durable power of attorney. A durable power of attorney is a special type of power of attorney that remains effective while you are incapacitated so that someone you appoint will have the authority to make decisions for you. Because a durable power of attorney is such a powerful document, it is important that you contact an experienced Brooklyn Durable Power of Attorney Lawyer who will explain to you the legal significance of executing a durable power of attorney and who will ensure that your power of attorney is drafted and executing according to the requirements of New York law.
A power of attorney is a legal document in which you give another person the authority to act for you in matters relating to your property. When you execute a power of attorney, you are referred to as the principal and the person to whom you delegate authority is referred to as your agent or attorney-in-fact. What makes a power of attorney "durable" is that fact that it will include a statement such as "This Durable Power of Attorney shall not be affected by my subsequent disability or incompetence." This means the power of attorney will be effective even if you should become mentally incapacitated. Under New York law a power of attorney is durable unless it specifically states that it becomes invalid upon the incapacity of the principal. N.Y. GOB. Law § 5-1501A
In the power of attorney you will specify what powers you are delegating to your agent. For example, you can give your agent the authority to sell your house. This means that your agent has to the power to bind you to a contract to sell your house as if you signed the sale contract yourself. The authority that you grant in the power of attorney can be specific, such as buying or selling real estate, or it can be broad and apply to all financial transactions related to your property.
Examples of specific powers that you can grant include authority related to: real estate transactions, chattel and good transactions, bond, share and commodity transactions, banking transactions, business operating transactions, insurance transactions, estate transactions, claims and litigation, benefits from military service, retirement benefits transactions, and tax matters.
You can even grant your attorney-in-fact the authority to give your spouse, children, parents and other relatives gifts of up to $10,000 annually.
May I also execute a durable power of attorney for health care?Yes. However, in New York a durable power of attorney for health care is called a health care proxy and the agent you nominate is called your health care proxy. With a health care proxy the person you name will have the authority to make health care decisions in the event you become mentally incapacitated and cannot communicate your wishes regarding your treatment to your physicians. A health care proxy only become effective once your doctor determines that your are mentally incapacitated.
What is needed to execute a durable power of attorney?In order to properly execute a durable power of attorney, the document must be written and executed as required by New York General Obligations Law:
NY GOB Law § 5-1501B
When does a durable power of attorney take effect?A durable power of attorney typically becomes effective on the date that the agent's signature is acknowledged. However, you can make the power of attorney "springing." This means that the power of attorney would only be effective upon the occurrence of a certain specified event such as you becoming incapacitated. NY GOB Law § 5-1501B
When does a durable power of attorney end?If you decide that you need to terminate the power of attorney, you must give notice to the agent. You can revoke a durable power of attorney any time you choose to as long as you are competent. Under New York law revocation of a durable power of attorney occurs automatically if you die, the purpose of the power of attorney is accomplished, or the agent dies or becomes incapacitated. NY GOB LAW § 5-1511.
It is important to understand that a durable power of attorney does not authorize your attorney-in-fact to manage your estate once you pass away. Upon your death, the winding up of your affairs and administering your estate is the job of the executor named in your will. If you want the person who you name as your agent in your durable power of attorney to also handle your affairs after your pass away, you must also name that person in your will as your executor.
What if I do not have a durable power of attorney?The consequence of not having a durable power of attorney is should you become incapacitated your loved ones will not know your wishes for taking care of your financial or personal affairs. Furthermore, there may be no one who has the legal authority to take care of your personal or financial affairs. As a result your affairs may fall into disarray. For example, your mortgage may go unpaid. Your spouse, parent or child may be able to handle some of your financial affairs without a power of attorney. However, some financial issues would require a power of attorney.
Ultimately, the court may step in and appoint a conservator to make decisions for you. The court will seek to appoint a family member to act as your conservator. However, if there is no suitable family member available, the court may appoint a stranger who would not be accountable to your family, but who will be accountable to and supervised by the court.
The conservator will remain in place as long as the court determines that the conservator is needed. If your medical condition improves enough so that you are able to resume taking care of your affairs, the court will end the conservatorship. NY MHY LAW § 81.36. Otherwise, conservatorships remain in place until you pass away.
Issues related to incapacity are very complicated. It is important that you make well-considered choices in advance. An experienced Brooklyn Durable Power of Attorney Lawyer will be able to explain to you your options for your durable power of attorney as well as other documents that are essential for planning for future incapacity. The staff at Stephen Bilkis & Associates, PLLC regularly works with New York clients to help them draft durable powers of attorney as well as other estate planning documents. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan.