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Importance of a Durable Power of Attorney to Prepare for Incapacity

By the time you start thinking about estate planning you are likely in a later stage in life. There are some of you that might prepare your estate plan earlier in life because your strong urge to protect your family and your loved ones.

The first thing that I ascertain when an elderly person comes into my office for estate planning is their capacity. Unfortunately as we get older in age our brain doesn’t work the same and it takes more effort to understand things.

Mental conditions like Dementia and Alzheimers do not make things any simpler.

Why Planning for Incapacity is Important

Our laws establish capacity as an element to our every day life. In order to enter into a contract you must have capacity. We enter into contracts all the time, when we go to the grocery store, fill gas, or buy something online. 

In addition, for security purposes many private and governmental institutions will need to ascertain that you are the person that is the owner of the account and you have an understanding of the transaction that is being conducted.

If you or a loved one believe that you are incapacitated because you are unable to make decisions on your own or because you cannot longer take care of your basic necessities, then a Florida Guardianship must be initiated.

In order to execute estate planning documents, the person must have the requisite capacity. Typically, Florida courts have said that a person has testamentary capacity to execute a last will and testament or a revocable living trust if the person has a general understanding of the nature of its bounty, a general understanding of its value, and a general understanding of who is entitled to inherit. 

Petition to Determine Incapacity

A Petition to Determine Incapacity is filed in the county where you (the “ward”) resides. The petition outlines the reasons why you should be deemed by the court to be incapacitated and will request for an order entering incapacity.

Florida law and the court will prefer the least restrictive alternative to declaring you incapacity. The reason behind this is because if the court declares you incapacitated, whether partially or fully, certain rights are taken away from you.

Examples of the rights that are removed from you include the right to marriage, to enter into contracts, to apply for governmental benefits, to determine your residence, to manage property, to consent to medical treatment, amount others.

The Durable Power of Attorney

One of the least restrictive means to declaring you incapacity in Guardianship Court is the Durable Power of Attorney.

A Power of Attorney allows you (the “principal”) to select someone else (an “agent”) to make decisions on your behalf. 

A Power of Attorney terminates at your incapacity unless the power is “durable.” A Durable Power of Attorney is created by including language along the lines that the power is not terminated by your subsequent incapacity except as provided in Chapter 709 of the Florida Statutes.

Florida law makes the power exercisable immediately, not only during subsequent incapacity. A Power of Attorney can be general or limited depending on your choice.

A general power of attorney provides your agent with broad powers to do many of the day to day operations of your life. A limited power of attorney its typically drafted to give the agent the power to do one specific thing, for example sell your property. 

When should you have a power of attorney

As you get older it becomes more important to provide someone the power to do things on your behalf. I see that many of my clients rely on their children to communicate and make decisions on their behalf. 

In addition, if your family has history of dementia or Alzheimer it is important to prepare early as those conditions will impact your daily life tremendously.

When creating the power of attorney, your agent is not required to be communicated about the existence of the power. However, you must have a system in place to make your agent aware of the existence of the power. This can be done through an estate planning attorney or another trusted source. 

If you want to avoid conflict or you want to avoid misuse of the power, you may select multiple persons to be your agent-in-fact and the decisions to be made by unanimous or majority decisions. This will place everyone on notice of any potential transactions being done on your behalf.

Conclusion

It is better to do something than doing nothing. A Durable Power of Attorney is an important document in any estate plan.

To get an order determining incapacity might cost you or your loved ones in excess of $5,000. Compared to the price of obtaining Durable Power of Attorney it is a no brainer. Not to mention that if an order determining incapacity is entered, annual accountings will need to be entered by your guardian every year.

Hope you found the information useful. If you have any questions drop me a comment or feel free to contact my office.

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