Staten Island Attorney-in-Fact
A part of estate planning is planning for the possibility that one day you might be incapacitated. While it is difficult to think about, it is possible that one day you may be injured in an accident or suffer a serious injury that leaves you unable to care for your personal and financial needs. For many of us part of aging is becoming forgetful and suffering some sort of dementia. In addition, at any age a car accident or an injury from playing sports could leave you with a head injury that results in permanent brain injury. Even if you are not permanently injured, you could suffer a medical issue that leaves you incapacitated for an extended period. If this happens, who will make sure that your mortgage or rent is paid? Who will make sure that your credit card bills stay up to date? Who will apply for disability benefits for you? Who will make sure that your investments stay on track? If you execute a durable power of attorney then the person you name in the power of attorney to be your attorney-in-fact will have the authority to do all of these things for you. If you have not executed a power of attorney, then it is likely that no one will have the legal authority to take care of all of your financial matters. The court will have to step in. As you consider the best way to prepare for the possibility that one day you may be temporarily or permanently incapacitated, contact an experienced Staten Island Attorney-in-Fact Lawyer who will explain to you how an power of attorney works, and who will also explain to you other estate planning documents that will be necessary to meet your overall estate planning goals.
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The term "attorney-in-fact" is another term for "agent." An agent is a person who is authorized by another person, called the principal, to act for the principal. In order for another person to become your attorney-in-fact and legally act for you, you must formally appoint that person using a document called a power of attorney.What is a durable power of attorney?
A power of attorney can be durable or non-durable. Generally, a power of attorney becomes invalid if the principal becomes incapacitated. This type of power of attorney is a non-durable power of attorney. One the other hand, a durable power of attorney is one that remains effective despite that fact that the principal has become mentally incapacitated. Under New York law a power of attorney is durable unless it explicitly states that it is not.What is the difference between a power of attorney and a heath care proxy?
A health care proxy is the term used in New York for a power of attorney for health care, while the term power of attorney typically refers to a power of attorney for finances. The person who you delegate authority over your health care decisions is referred to as your health care agent.What type of authority may I delegate to my attorney-in-fact?
In drafting your durable power of attorney for finances you have enormous flexibility in granting and limiting your attorney-in-fact's authority. If you have executed a power of attorney as a part of planning for incapacity, you might choose to grant that person broad powers to have the authority to handle most if not all of your financial affairs. However, if you so choose, you can also grant your attorney-in-fact very limited powers. Examples of authority that you can delegate to your attorney-in-fact includes:
- Pay your bills such as our mortgage, rent, utilities, and credit card bills. This is important as you do want to risk accumulating late fees, having your house go into foreclosure, or damaging your credit.
- Provide maintenance to family members that you would have provided, with a limitation on the monthly dollar amount. Your attorney-in-fact would have the authority to continue to support your loved ones. However, your attorney-in-fact may not be able to provide the level of financial support that you provided as the statute provides a limit of $10,000 per person per year.
- Manage your real estate. Not only can you delegate the authority to pay your mortgage, if you own rental property you can delegate the authority to collect rent on your behalf.
- Manage investments, including voting, receiving or reinvesting dividends, capital gains or interest, or selling, assigning or transferring securities. If you choose to delegate the authority to manage your investments, be sure that your attorney-in-fact has the expertise to do this. Alternatively, make sure that you give your attorney-in-fact the authority to hire a financial advisor.
- Manage your tax returns, including preparing, signing and filing your tax returns as well as paying any taxes owed. Of course, your attorney-in-fact should hire an accountant to handle any tax issues that are beyond his expertise.
- Manage your bank accounts, including opening, closing, or modifying bank accounts, and making deposits and withdrawals.
- Purchase insurance policies for you, including life, medical, long-term care and disability
- Resolve claims against you by paying, contesting, or compromising.
- Borrow money on your behalf, including cancelling or continuing credit card accounts.
- Run your business for you, including forming any type of legal entity for you, transferring your property to a business owned by you, or reorganizing, merging or dissolving your business.
- Manage your retirement accounts, including establishing, contributing, and rolling funds over.
- Hire professionals on your behalf such as an attorney, accountant, or financial advisor.
- Apply for and collect any government benefits to which you are entitled such as Social Security disability.
In order to properly execute a power of attorney New York law requires certain formalities. The power of attorney must be legible. You must sign, date it and your signature must be acknowledged. It must also be signed and dated by the attorney-in-fact you named in the power of attorney. Furthermore, there is certain statutory language that must be included in the power of attorney in order for it to comply with New York law. NY GOB Law § 5-1501B. A durable power of attorney typically becomes effective on the date that the attorney in fact's signature is acknowledged. However, you can make the power of attorney "springing," so that it only becomes effective in event you become incapacitated or some other contingency occurs. For example, your durable power of attorney could include language such as: "My Attorney-in-Fact shall have no power under this legal instrument unless written confirmation of two Board Certified Physicians, Psychiatrists, or any combination thereof, who are intimately familiar with my physical or mental health, stating that I am no longer competent to handle my own financial affairs.”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 your attorney-in-fact. You can revoke a durable power of attorney any time you choose to as long as you are mentally competent. Revocation of a durable power of attorney occurs automatically if you die. NY GOB Law § 5-1511. By law a power of attorney will also terminate if any of the following events occur:
- You revoke your attorney-in-fact's authority and there is no successor attorney-in-fact who is able or willing to serve
- Your attorney-in-fact dies or is otherwise unable to serve and there is no successor attorney-in-fact who is able or willing to serve
- The authority of your attorney-in-fact terminates and there is no successor attorney-in-fact who is able or willing to serve. Examples of when the authority of your attorney-in-fact will terminate include if your attorney-in-fact dies, if you revoke his or her authority, of if you are married to your attorney-in-fact and that marriage ends by divorce or annulment.
- The purpose of the power of attorney is accomplished
- A court order revokes the power of attorney
N.Y. GOB. Law § 5-1511
The execution of a power of attorney automatically revokes prior powers of attorney.
Upon your death, the winding up of your affairs and administering your estate is not the job of your attorney-in-fact but of the executor you named in your will. If you want the person who you name as your attorney-in-fact 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 that there may not be a plan or an understanding as to how your financial and personal affairs should be handled while you are incapacitated. Furthermore, there are many transactions that no one other than you would legally be able to complete. For example, without a durable power of attorney your daughter may still be able to make sure that your bills are paid. However, she would not be able to access your bank account or handle most other financial transactions on your behalf. Without a durable power of attorney the result would likely be that the court would end up intervening and appointing a conservator, also referred to as a guardian, to make financial decisions for you. In general, a 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 non-relative or a public conservator. The conservator will not be accountable to your family, but will be accountable to and supervised by the court. The conservatorship would remain in place as long as the court determines that you need a conservator. 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, the conservatorship will remain in place until you pass away.What Else Should be Part of My Estate Plan?
While a durable power of attorney is an important part of your estate plan, it should not be the only component. A durable power of attorney only addresses financial issues in the event that you become incapacitated. You should also consider protecting your assets and financial health while you are living and also planning for how your estate should be handled upon your death. To do this, you will need other essential documents such as a will and a trust.
A last will and testament is an estate planning tool that most people are familiar with. It allows you to leave property to your loved ones after you pass away. You can leave gifts of cash, stocks, bonds, real property, jewelry, and collectibles to those you care about. You can also indicate in your will who will serve as the guardian for minor children who survive you. With a will you can even make sure that your pets are cared for after you pass away.
A trust is in some ways similar to a will in that it can also be used to leave your loved ones property after you pass away. Trusts have some advantages over a will. For example, trusts allow you to give gifts during your lifetime. At the same time, if you chose to you can retain control over the assets you give away. Also, trusts can be designed to protect your assets from future creditors. This type of trust can be important if one day you must move to an assisted living facility or nursing home and do not want to use all of your assets to pay for it. In addition, a trust is different from a will in that a trust is not subject to probate, resulting in a quicker distribution of assets to your beneficiaries.
You may need additional documents in your estate plan depending on your goals, your family's needs, and the size of your estate. A well thought out plan and properly drafted and executed estate plan documents will ensure that you meet your personal and financial goals for you and your family.
As you consider how to plan for your future and the possibility that at some point you may need an attorney-in-fact to handle your finances for you, it is important to consult with an experienced practitioner who understands the legal issues related to the appointment of an attorney-in-fact. To learn more about the advantages of a durable power of attorney as well as other estate planning tools, contact Stephen Bilkis & Associates, PLLC. We will help you execute a durable power of attorney, a health care proxy as well as an overall estate plan that reflects your individual goals. Contact us at 800.696.9529 to schedule a free, no obligation consultation regarding your estate plan. We serve individuals throughout the following locations: