Short Answer is Yes. You need things in place in case you become incapacitated before you die. Not a fun thing to think about, but necessary. Many if not most people suffer this situation. Those with any kind of dementia, cancer patients that are too medicated to make proper decisions or to execute documents and others need these forms. The primary documents you will need are a Durable Power of Attorney, a Durable Power of Attorney for Healthcare and possibly a Living Will. I will deal with the Durable Power of Attorney in this post and the other two in an additional post.
A Durable Power of Attorney allows a person to appoint a relative or friend or if necessary a trust company or other institution to act for them in all matters other than healthcare decisions. This means that the appointee can do the banking, estate planning, personal care and support and support of dependents for the incapacitated person. It even can cover things no one might ordinarily think of like pet care and redirecting mail to a nursing home or other alternative residence. It can allow for the gifting of the primary residence to the spouse of the incapacitated person which will allow for the sale or mortgage of the property by the unaffected spouse.
The Durable Power of Attorney will allow the appointee to execute documents for the incapacitated person. In addition to documents like those for investment accounts, it can allow the appointee to file a claim for the incapacitated person. Imagine, for example, that the person has become incapacitated due to an accident. This document will allow the appointee to file suit on behalf of the incapacitated person against the responsible party and to settle the case.
This doesn’t mean that the incapacitated person can be taken advantage of by the appointee. The appointee will be bound to act in the best interests of the incapacitated person and can be made to follow state laws regarding prudent investing. In addition, Durable Powers of Attorney may be changed at any time by either party. Thus if the relationship changes, the terms are not written in stone.
What happens if you don’t have a durable power of attorney? The answer is pretty dire. A guardian/conservator must be designated by a probate court. This means filing an extensive document with the probate court including extensive forms that must be filled out by a doctor who is caring for the incapacitated person. This process is expensive and requires a trip to Probate court. Let’s just say the Durable Power of Attorney is a MUCH more desirable option.