For most clients, the durable power of attorney is the most important estate planning instrument available — even more useful than a will. A power of attorney allows a person you appoint — your “attorney-in-fact” or “agent” — to act in place of you – the “principal” — for financial purposes when you need assistance, whether you are incapacitated or simply unable to handle your financial affairs.
In that case, the person you choose will be able to step in and take care of your financial affairs. This person, known as an “agent” has a high fiduciary duty to you as the principle to act in your best interest and without a self-serving interest. Without a durable power of attorney, no one can represent you unless a court appoints a conservator or guardian. That court process takes time, costs money, and the judge may not choose the person you would prefer. In addition, under a guardianship or conservatorship, your representative may have to seek court permission to take planning steps that she could implement immediately under a simple durable power of attorney.
A power of attorney may be limited or general. A limited power of attorney may give someone the right to sign a deed to property on a day when you are out of town. Or it may allow someone to sign checks for you. A general power is comprehensive and gives your attorney-in-fact all the powers and rights that you have yourself.
A power of attorney may also be either current or “springing.” Most powers of attorney take effect immediately upon their execution, even if the understanding is that they will not be used until and unless the grantor becomes incapacitated. However, the document can also be written so that it does not become effective until such incapacity occurs. In such cases, it is very important that the standard for determining incapacity and triggering the power of attorney be clearly laid out in the document itself.
A properly drafted Durable Power of Attorney in Missouri requires the formality of certain language regarding its effectiveness should the principle be unable to act. Furthermore, Durable Powers of Attorney should be carefully drafted by an attorney to ensure that all powers that may be needed are adequately stated in the document. If those powers are not stated, many strategies to protect assets as part of a long-term care plan may be impossible to implement by your agent.
In other words, do not obtain a form from online or an office supply store and expect the form to provide the level of protection a properly drafted Durable Power of Attorney by an experienced attorney can provide.