Last Wills and Testament: What is a Power of Attorney?

When creating a last will and testament, it is important to set up a Power of Attorney, a legal document. It allows you to indicate the name of the individual or "attorney in fact" to whom you give the legal right to manage your assets. This right includes the ability to invest or spend your assets.

Powers of Attorney and State Laws

Each of the fifty states has their own specific set of rules when it comes to governing the Powers of Attorney. However, even though some of these guidelines vary, many of the rules are consistent from state to state. Due to the presence of strict requirements set forth by each state, it is important to receive estate planning advice from someone qualified to provide it. Either an estate planner or an attorney would be qualified to provide this type of guidance.

In general, the guidelines governing the Power of Attorney include the following points:
· Restrictions of who can or cannot be an attorney of fact.
· Who can create or determine a Power of Attorney.
· Special formalities relating to the signing of the document in order to make it valid.
· Special formalities that must be followed in order to make the document legally viable.

Durable Versus Springing Power of Attorney

In addition to setting up specific guidelines regarding the assignment of an attorney of fact as well as the legal documentation, most states also provide a clear distinction between a durable and a springing Durable Power of Attorney.

What Is a Durable Power of Attorney?

A Durable Power of Attorney goes into effect the moment that the document is signed. This means that the attorney of fact can make immediate decisions regarding the management, investment, and spending of your assets. Neither your physician nor other individual will have the authority with which to interfere with this process.

What is a Springing Power of Attorney?

A Springing Power of Attorney is one that will go into effect should the individual whose document it is become mentally incapacitated due to physical disease, mental disease, or an accident. Of course, a physician or court will need to declare the individual mentally incompetent or otherwise disabled. In some cases, more than one physician will be required to make this declaration, depending on the rules of the state.

Once this declaration of mental incompetence has been declared, attorney in fact can step forward to take over the handling of assets. Unfortunately, this transition can take time due to the paperwork that is involved and the documents that must be signed and filed. This means that the possibility exists that bills will go unpaid ad necessary handling of the assets will also be delayed.

The Power of Attorney as it Relates to a Revocable Living Trust

For those individuals who have a Revocable Living Trust, a few considerations need to be made. The Power of Attorney in this case will deal with only those assets that have not been funded into the trust. The Trustee does not have the legal capacity to deal with those assets. However, any assets that have been properly funded into the trust will be managed by the Trustee in the manner in which he sees fit.

Once the individual dies, the all of this will change as the assets no longer need to be managed, invested, or spent. At this point, the attorney of fact's authority is revoked. The remaining assets will be probated per the guidelines of the state of residence.

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