Many people living in New York understand the importance of estate planning. These individuals will write and regularly update their wills. They may also regularly review beneficiaries on insurance policies and investment accounts. However, some do not consider the possibility that they may become incapacitated before they die.
Attorneys often recommend that individuals prepare for the possibility that they may lose the ability to make decisions for themselves before they pass away. Living wills, advance directives and powers of attorney can help people ensure that their desires and needs are met even if they fall into mental decline or become so ill that they cannot communicate with others.
A financial power of attorney allows a trusted party to make financial decisions for another individual. There are two main types: durable and springboard. A durable power of attorney goes into effect as soon as it is executed and ends after the estate planner dies. In contrast, springboard powers of attorney only go into effect when the estate planner becomes incapacitated.
Both types of power of attorney have benefits and drawbacks. A springboard power of attorney may seem like the most sensible approach given that somebody may not wish to immediately turn over management of his or her finances to another person. However, it can become difficult to determine when a person truly becomes incapacitated, and there is the possibility that there may be some legal wrangling before banks are willing to recognize the incapacitation.
As a result, durable powers of attorney are often easier to manage, although there is always the risk that an unethical individual may drain accounts and otherwise abuse the finances of the estate planner. Individuals who are concerned about estate planning issues may benefit from talking with an experienced attorney.