Durable power of attorney
In our continuing series on the essential elements of estate planning, Kiplinger's John Ventura returns to talk to Tess Vigeland about establishing a durable power of attorney.
John Ventura, author of "Kiplinger's Estate Planning." (University of Houston)
TEXT OF INTERVIEW
Tess Vigeland: For now, we're joined again by John Ventura. He's the author of "Kiplinger's Estate Planning."
And John, this week we're dealing with something called durable power of attorney. Where does this fit within estate planning?
John Ventura: The durable power of attorney is an important document for people that have, say, a complicated business situation, maybe they own a business, or they find themselves at an age when they really cannot make the daily financial decisions that need to be made about their life. Now let me explain what it is: The durable power of attorney is a document where you give authority to a person to act to act in your behest and what that means is that they can make all decisions that are necessary about your assets. You give them the power to sell your assets, to buy things, to enter into contracts for you, to make decisions about investments, to pay your bills. Another situation that may come up is incapacitation. If you suddenly have a stroke and you want all your affairs to be taken care of, you would want to have a durable power of attorney and a person designated to handle all your affairs if that should occur.
Vigeland: So is this something that you would want to do at almost any age?
Ventura: You know, not everyone needs one of these things, but if you have a business, if you have complicated financial affairs, debts that need to be taken care, investments, property, then I think you should have a durable power of attorney and someone chosen that's going to make decisions for you if you're not able to do it.
Vigeland: How do you choose someone to represent you and your interests?
Ventura: It's not easy to find the person that you want to have this authority over your assets. Of course, you want to look at your relatives, people that you trust, people that you've known for a long time, but you have to think about not only do you trust them but are they going to have the skills, the knowledge to make good decisions on your behalf.
Vigeland: What kind of skills would they need?
Ventura: I think they would have to have some business skills in regards to how to maintain assets properly. In other words, how to manage assets so they're not depleted...
Vigeland: I think that would be very hard for a lot of people to find that person
Ventura: It is hard for someone to find someone who fills that bill. You know, a lot of times a person will discuss this and choose a business person or perhaps a lawyer or someone at a bank that they've been dealing with for a long time.
Vigeland: How much power does durable power give you? Is this very broad? Is it limited?
Ventura: You know, it could be either. A lot of times, a durable power of attorney, they're very broad gives a person all the power that they need to deal with your assets. Sometimes you may have a power of attorney that's narrow and you may say that this person has the right to deal with my real estate but they're not allowed to sell it, they're just allowed to manage it or investments, they're allowed to do certain things but not other things.
Vigeland: OK, so you need to be real specific about just how broad this power of attorney is?
Ventura: Absolutely.
Vigeland: And what do you do with it when you're done with it. Does it go where your will is and where all of your other important papers are?
Ventura: Yes, you need to make sure... when you do a durable power of attorney, you're going to execute several original documents because you're going to want the person that's going to represent you, they need to have an original document, originally signed, not a copy, to present to the institutions. Again, this is not something that you want to put in a safety deposit box that's going to be hard to get to. You want it to be available as soon as something happens to you so that whoever's going to represent you can immediately start filling that role and taking care of your property for you.
Vigeland: John Ventura is the author of "Kiplinger's Estate Planning." Thanks for joining us again.
Ventura: Thanks Tess.
Vigeland: And John will join us in two weeks to go over medical power of attorney.
Comments
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From SD, 06/28/2008
Durable powers of attorney are also important for health care decisions in the event a person is incapacitated, and are more useful than a living will. Everyone should have a POA for health care regardless of whether they fit Mr. Ventura's profile for needing a POA for business or financial reasons.
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