A comprehensive estate plan in New York generally includes a Last Will and Testament (commonly known as a “will”), a trust (sometimes), a Living Will, a Health Care Proxy, and a Durable Power of Attorney.
What is a Power of Attorney?
In a nutshell, a power of attorney (“POA”) is a legal document where the maker (the “principal”), gives someone else, known as the “agent” the power to make financial and/or medical decisions on their behalf. In New York, a POA must contain specific language, must be executed in accordance with certain statutory requirements, and must be signed at a time when the principal has the mental capacity to understand the purpose and effect of the document. To avoid the POA being rejected as defective upon presentation by the agent, it is highly recommended to have it prepared by and executed under the direction of an attorney who specializes in planning estate planning.
- A General POA is one that ends when the principal becomes incapacitated (or dies). It is often used for a specific and/or limited purpose, such as to conduct a business or a real estate transaction, when the principal–who is competent–is just not able to be present to conduct the business themself.
- A Durable POA is one that remains in effect when the principal becomes incapacitated.
- A POA can be revoked by the principal. All powers of attorney automatically end when the principal dies. Powers of Attorney for estate planning purposes are durable because they are made in contemplation of a possible future incapacitation.
- A POA can be “automatic” and become effective immediately upon execution. Alternatively, a POA can be “springing” which means it does not go into effect until a designated event, date, or situation (as outlined in the POA) occurs in the future. The incapacity of the principal is just one example of a common event that could generate the POA to “spring” into effect.
Who should consider creating a power of attorney?
In short, every adult should have a POA so someone they trust is authorized to handle their financial and/or medical decisions in the event they are injured, incapacitated, or otherwise unable to do some of themself. Many people think they only need a will for when they die. But the odds of becoming disabled or incapacitated by an accident, illness, or other unexpected event higher than most people realize. It’s crucial to have appropriate POAs in advance, so someone you trust can step in and manage your affairs until you’re no longer incapacitated.
A POA is particularly important if you:
- frequently travel out of state or internationally
- have a hazardous work environment
- suffer from a severe, chronic, debilitating, or terminal illness
- rely on someone else to maintain your business or property when you can’t
- want a specific person to handle your business, property, and/or life decisions in accordance with your rules
- are getting older and need someone to handle your financial and medical matters
- have children who need to be provided for if you were to become incapacitated.
This last reason is particularly true for parents of intellectually disabled or developmentally disabled children.
Someone needs access to your financial resources so they can continue to pay your bills for all your life’s expenses like food, housing, utilities, insurance, etc. that support you and your special needs child. Someone needs to step in and file the paperwork, hire/fire/coordinate/pay the special needs child’s staff (if any) and otherwise manage the government benefits programs that the child is receiving or applying for, so benefits do not get forfeited or lapse. A POA allows you to pick a trusted person to step in and handle the things you handle for your special needs child if the unthinkable happens to you.
In New York State, the medical POA is referred to as a Health Care Proxy. It allows the principal to designate an agent to make healthcare decisions on their behalf if they’re unable to do so. Obviously, it’s important to completely trust the agent you choose as they may need to make potentially life or death decisions about your medical care one day.
The other document that rounds out a comprehensive estate plan is called a Living Will. A Living Will allows you to make advanced directives regarding your end-of-life care. Decisions generally addressed include whether you do or don’t want a “Do Not Resuscitate” order (“DNR”), administration of antibiotics, a feeding tube, IV hydration, pain management medication, mechanical respiration/intubation, etc. You can also specify whether you would like to donate any of your organs.
MUST HAVE PLANNING: Choosing and timely implementing the right advanced directives when you have a disabled loved one is crucial to ensuring that a trusted agent will be able to step in and handle your financial matters if you become incapacitated. Advanced directives are part of a comprehensive estate plan.
For more information, download our FREE report of 10 Must Have Documents for All Parents of Special Needs Children.
At Sverdlov Law, we are dedicated to helping our clients get the peace of mind that comes with getting their affairs in order, preserving their assets, and protecting their families. From our office on Wall Street, we represent clients throughout New York City and New York State in all aspects of estate planning, estate administration, Medicaid planning, elder law, and business succession matters.