New York residents may be able to plan for what happens to assets after they die by creating a will or trust. However, there is also a way to plan for what happens if an individual becomes mentally incapacitated while still alive. By adding a power of attorney, an individual can appoint an individual or entity to manage his or her financial affairs.
Typically, this person is a spouse, child or close friend, and it possible to give more than one person power of attorney. It is important that an agent is given durable powers of attorney as opposed to nondurable. Nondurable powers of attorney are no longer valid if the person who gave that power becomes incapacitated. Individuals are urged to use an attorney to create a power of attorney document as do-it-yourself forms may not be adequate.
Giving another person or entity power of attorney may make it easier for an individual to retain control over personal assets. This is because an agent generally only has the ability to act within the guidelines set forth in the document. Therefore, while a person may be given authorization to sell items to pay for an incapacitated person’s care, it may be possible to set a minimum price that it can be sold for.
The use of a will or a trust may further limit who has access to certain assets or how they are to be used. If a parent has minor children, a will may allow for the appointment of a guardian for those children. An attorney who has estate planning experience can suggest other documents that might be appropriate as well.