One of the most important pieces of estate planning is the enduring power of attorney. If you’re doing a will, you should also be doing an enduring power of attorney (and, for that matter, a personal directive).
What is an enduring power of attorney?
An enduring power of attorney is a document that allows you to determine who will make financial decisions for you if you become mentally incompetent. The enduring power of attorney typically lists a first choice and a second choice for the financial representative role. In some cases a third or fourth choice may even be indicated. The financial representative is called the attorney, but in this case attorney simply means representative; it doesn’t mean the person has to be a lawyer.
An enduring power of attorney will also contain information about when the representation will take effect. It’s quite common to indicate that the representation will take effect upon one or more medical doctors determining that the person who entered into the EPA (also known as the donor) is mentally incompetent. Sometimes a donor will indicate that the representation is to take effect immediately.
An EPA may also list some constraints that the attorney will have to follow in acting as a financial representative. For example, the EPA may indicate that the attorney has to provide financial reports to other close family members every so often, such as, once every six months or once a year.
Why you should do an enduring power of attorney
While a will protects your loved ones, an enduring power of attorney protects you. Unfortunately, it’s not uncommon for elderly people who are suffering from mental decline to experience different forms of abuse, including financial abuse. An EPA can help protect you against financial abuse down the road when you are most vulnerable. An EPA can also help protect the family members you have listed as beneficiaries in your will from someone unscrupulous draining all your assets before you die.
When you should do an enduring power of attorney
I always recommend that people do EPAs when they’re doing their wills. At that time you should also consider doing a personal directive, which is similar to an enduring power of attorney, but instead deals with medical and personal decision-making rather than financial decision-making.