Estate Planning is More Than Just Death Planning — Understanding the Power of Attorney
Updated: Apr 3
Estate planning is more than just “death” planning. That’s why you’ll see us refer to it as life planning. Because a life plan accounts for much, much more than our inevitable demise.
Though most people understand the value of life planning when it comes to end-of-life concerns (i.e., the distribution of one’s personal assets after death, shielding estate assets from excessive taxes, etc.), most people often fail to recognize that life planning also plays an important role in protecting individuals in the event of a disabling event that renders them incapacitated.
Those who delay the creation of a comprehensive life plan are thus risking the loss of control in two situations where the existence of prior instructions (as in life planning documents, such as a Last Will & Testament) are necessary to make one’s desires known: 1) death and 2) incapacity. Truly comprehensive life plans must not only account for death, but also for the possibility of survival — and as a consequence, the challenges faced by an individual who is living, but incapable of making decisions for their own benefit.
We understand that this can all be a bit confusing, and even overwhelming, to those who are otherwise unfamiliar with the development and execution of a life plan.
Consider the following:
Suppose that you are injured in a car accident, leaving you with brain trauma that puts you into a coma. The coma may last for a period of a few months to a few years. Depending on how the brain damage responds to medication, there is also a chance that you simply won’t wake up.
Before the accident, you relied heavily on your real estate assets for income. Under these circumstances, you stand to lose quite a bit even if you do come-to months or a year later. Without a designated agent to manage and control the real estate property on your behalf, it could be mismanaged in your absence. There could be permanent damage and depreciation, missed opportunities on the real estate market (for selling/buying), mistakes in handling tenant issues, failure to receive rental payments, and more.
In this example, a durable power of attorney — a component to a life planning that gives you the ability to designate a trusted person or entity as your “agent” — would be critical for securing your real estate financial interests during the coma.
A durable power of attorney is a powerful tool for managing decision-making during periods of incapacity. Let’s take a closer look at how they work.
The Durable Power of Attorney — Basics
In comprehensive life plans, the durable power of attorney is meant to serve the principal (you) when they are incapacitated. Specific decision-making authority is given to the designated agent so that they can make important decisions on the principal’s behalf until the principal either dies, revokes the authority, or is no longer deemed incompetent. For example, an agent may be granted powers to rent and maintain property owned by the principal. Though a durable power of attorney activates the moment that it is signed (Fla. Stat. § 709.2108), it is can be withheld by the principal until necessary. If withheld, someone –typically a lawyer – will give the power of attorney to the agent when it is time (i.e., when the principal becomes incapacitated) so that the agent can assume their duties under the power of attorney.
The designated agent is usually a family member or friend, but is sometimes a professional who is trained to handle such responsibilities.
The durable power of attorney must be written specifically, with powers (and related actions) listed -- without this, the agent cannot assume their powers (Fla. Stat. § 709.2202). A larger set of powers may be granted to the agent in cases where the principal trusts in their ability to handle a wide range of responsibilities. In other cases, however, the principal may feel that an agent is only qualified to handle one narrow aspect of their care.
Returning to our previous real estate example, the principal’s spouse may be an excellent choice to advocate on their behalf in the medical treatment context, but they may feel that a friend (who is also a professional real estate manager) is a better choice to manage their real estate investment portfolio. This high-level of specificity is entirely possible with properly drafted life plan.
If you’d like to learn more, we encourage you to contact our office to speak with us about your life planning goals or concerns.
This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Law Offices of Mark F. Moss, PLLC, through this site does not form an attorney/client relationship.