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Why a durable power of attorney should be part of your estate plan

A common misconception is that estate planning is only about what happens to your property after your death. The financial or durable power of attorney is an aspect of estate planning that can help manage your affairs while you are still very much alive. Giving a trusted person your power of attorney creates the legal authority for that person to step in and manage your money and related affairs should you become incapacitated.

Some terminology: The person receiving the power is the attorney-in-fact or agent; the person granting the power is the principal.

Typical scenarios

Having an attorney-in-fact could be important in a variety of situations. During any period in which the principal is not capable of managing his or her own affairs, the agent can step in to pay bills, arrange for personal services, maintain investments and more.

For example, the principal may face a medical procedure that will temporarily incapacitate them, requiring an attorney-in-fact to manage the principal's affairs until capacity is restored. Many people sign power-of-attorney documents in anticipation of the eventual aging process that could bring related capacity problems, requiring agents to step in and assist.

A person in good health at any age can suddenly become incapacitated in an accident or by an unexpected, severe illness. Having an attorney-in-fact already arranged can help make the shock less stressful because bills can still be paid and family members financially supported.

Legal matters

Having a financial power of attorney in place is always a good idea, but to put a valid power of attorney into place in California, you must have the legal capacity to enter into a contract. After developing a power-of-attorney form that reflects your unique wishes and needs, the document must be dated and you or someone you direct in your presence must sign it. The signature must be either acknowledged by a notary or signed by at least two eligible witnesses.

Whether you already have an estate plan to be reviewed or are just getting started, it is important to talk to an experienced California estate planning attorney. California laws governing financial powers of attorney are detailed and complicated. A legal professional can have a comprehensive discussion with you about who would be a logical choice to serve, what kinds of powers you want that person to have (or not have) and the areas of your life that an agent would need to manage if you could not do so.

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