By Attorney Miguel C. Mondragon
Many people believe only married couples with small children and considerable assets should consider an estate plan. In fact, all adults can benefit from a well-crafted last will and testament and power of attorney. These legal documents offer many benefits and allow you to pass assets onto beneficiaries according to your wishes in the event you become incompetent. The most fundamental, and likely the most well-known, estate planning instrument is the last will and testament.
A last will and testament is a legal document that designates who will inherit your assets, when your beneficiaries will receive those assets, who will manage your estate when you die and among other things, name the guardian for any minor children. In the event you die intestate, meaning without a will, your estate will be divided in accordance with the per stirpes laws of Colorado and your children may become wards of the state.
While a last will and testament will ensure your estate and children are taken care of upon your death, a power of attorney will ensure your health care needs and financial assets are managed properly in the event you are declared incompetent and cannot make those decision for yourself. A general power of attorney is a document that grants legal rights and powers by a person, named the principal, to another, named the agent or attorney-in fact, to make decisions on behalf of the principal. The agent has a fiduciary obligation to make decisions based upon the preferences of the principal. A critical component of a power of attorney is ensuring the power of attorney is “durable”, meaning, the power of attorney permits an agent to make decisions for the principal if they become incapacitated.
A general “durable” power of attorney grants the agent authority to manage the finances of the principal in the same fashion as if the principal were making the decision themselves. This means, your power of attorney will have the authority to bank, acquire property, sell assets and manage all your financial and business matters based on your preferences. It is critical that extreme care and caution are used when selecting your attorney-in-fact as there is little to no oversight of their decisions. It is easy for people to confuse the powers granted in a power of attorney verses the powers granted in a conservatorship. Under a power of attorney, the principal retains their rights to make their own decisions alone. An agent only has the power to act along with the principal in accordance with the authorization set forth in the document.
A medical power of attorney authorizes your agent to make medical decisions for you should be unable to do so – for example, if you have become unconscious or mentally incapacitated. This document can become part of an advance healthcare directive. There are many situations that could result in a person being unable to make or communicate medical decisions. These situations can affect not only senior citizens, but younger adults as well. An individual may be rendered unable to make medical decisions as a result of a head injury, stroke, heart attack, mental illness, car accident, or any number of events that can result in a person becoming unconscious, incompetent, or unable to communicate.
A medical power of attorney can be as simple or as complex as the principal wishes to make it. A well-crafted medical power of attorney will cover several scenarios, which include end of life decisions, organ donation and final wishes. Making these decisions yourself and removing this burden from your loved ones is one of the greatest gifts you can do for those you care for and love. However simple or complicated your medical power of attorney is, it is important the documents comply with the Health Insurance Portability and Accountability Act of 1996, also known as “HIPPA”. HIPPA ensures your medical information is kept private as well as allowing your attorney-in-fact to have access to critical medical information.
There are very specific legal requirements, many of which are governed under Colorado’s Probate Code (C.R.S. §15-1-101,et al), that must be closely adhered to ensure your estate plan will be enforceable and survive probate as well as ensuring your power of attorney is upheld. Obtaining competent legal counsel is just as important as the documents themselves. If you or someone you know are searching for an estate plan or a power of attorney, please contact Divorce Matters to be connected with an attorney for assistance.