In an emergency, a person may be unable to pay their bills, run their small business or manage their assets. They could recover from a medical event or similar issue, only to face major economic setbacks.
Financial powers of attorney protect people from economic issues caused by their inability to communicate or manage their finances. If they cannot pay their bills or file their taxes, the agent or attorney-in-fact they selected can manage their finances.
There are many scenarios in which people may require powers of attorney, including as they prepare for retirement or when they face major medical emergencies. Older adults and those facing medical challenges may find that durable powers of attorney are especially important for their financial protection.
Durable documents persist despite incapacity
Basic power of attorney documents may lose their authority when a person becomes permanently incapacitated. If an individual is in a coma and never wakes up, if they develop dementia or if they have a serious brain injury that diminishes their cognitive capabilities, the courts may determine that they have become permanently incapacitated.
Traditional financial powers of attorney may not serve their intended function in that scenario. Durable powers of attorney include special language that empowers the agent even in the event of long-term or permanent incapacity. They remain in effect until the principal dies, recovers or revokes the document.
For those at risk of cognitive decline or medical emergencies, durable powers of attorney are important inclusions in comprehensive estate plans. Discussing medical and financial needs with an estate planning attorney can help people create powers of attorney designed to protect them in a variety of different challenging situations.
