Why You Should Have A Statutory Durable Power Of Attorney
An important component of an estate plan is a statutory durable power of attorney, often called a general power of attorney. This power of attorney allows you to name an agent or agents to carry on business-type activities on your behalf if, for any reason, you are not able to do so yourself.
Consequences Of Not Having A Power Of Attorney
People don't like to think about the possibility of becoming incompetent to handle their own affairs. Or, they may have trouble deciding who they would want to serve as their agent if they do lose competency. So, they procrastinate until it's too late. Having this power of attorney drawn up sooner rather than waiting can be critical.
The most important reason to have this power of attorney drawn up is that, if you become incompetent or incapacitated, and you have no spouse, or the third party you're dealing with will not allow your spouse to act on your behalf, the only option available to conduct your affairs is to have a guardianship established.
Downsides Of Guardianship
Guardianships are extremely expensive, complicated, and time-consuming. In addition to the court filing fees, service fees, and attorneys fees, the applicant for the guardianship must have an attorney ad litem appointed to represent the interest of the incapacitated person, who is called the ward.
The guardianship application process, even if uncontested, will likely cost about $5,000. If it is contested, meaning that more than one person seeks to be appointed or another interested person disputes that a guardian is needed, the costs can easily go to $10,000 or more. The attorney ad litem's fee may be several hundred to a thousand or more additional fees.
One other drawback of failing to draw up a power of attorney is that you may have no choice about who is appointed your guardian. The court will follow a statutory order of persons who have precedence to be appointed. You may love these people dearly but have no confidence in their ability to manage your financial matters.
Draw Up A Power Of Attorney Now
A guardianship for an incapacitated or incompetent person is to be avoided if possible. The simple way to do this is to have the statutory durable power of attorney drawn up before there is any question about your competency. Once competency is lost, you cannot draw up your own power of attorney. The cost for preparation of this document will likely be in the range of $350-$500. Obviously, this is substantially less than the cost of a guardianship proceeding.
What are you waiting for? Do not procrastinate. Clients with loved ones who have become incompetent frequently tell me there were plans to have a power of attorney drawn up before competency was fully lost. Waiting too long can be dangerous.
If you would like to talk about drawing up a statutory durable power of attorney, please call Adair M. Buckner for a free initial consultation.*
*(The free consultation does not cover actual review of documents or giving legal advice on a specific situation.)
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