A Power of Attorney is a document that allows you to give another individual the authority to handle your financial affairs on your behalf. A “durable” Power of Attorney remains in effect upon your incapacity. This means that if you become unable to handle your own affairs, the individual you appoint could do so for you.
The benefit of having a Power of Attorney is that it allows for the management of your affairs by the person you appoint without court supervision. However, it is important to select an individual you trust since you are giving full control over your financial affairs, even the ability to sell your home.
Without advance planning and an executed Power of Attorney, if you become incapacitated, your loved one would have to petition the court for a conservatorship. A conservatorship is a court proceeding where a Judge determines that you are unable to manage your affairs and an individual (a conservator) is appointed to manage your affairs for you. A conservatorship is designed to protect you when you are incapable of managing your affairs but your affairs will no longer be private and subject to court supervision and can be costly because of the court involvement. Therefore, having a Power of Attorney in place in advance can provide significant benefits in terms of time and cost but, most importantly, your privacy.
A Power of Attorney expires upon your death and it is not a substitute for providing instructions regarding the distribution of your assets at death. Therefore, in addition to a Power of Attorney, you should also have a complete estate plan, including a living trust or will to direct the disposition of your estate at your death.