Married couples will often have legal estate documents prepared together. Such documents may include a will, leaving all property to the surviving spouse and/or the couple’s children, and a heath care proxy (sometimes known as a living will) to direct the spouse how to handle medical issues if one spouse becomes incapacitated. However, another estate document may be beneficial for spouses — a durable power of attorney.
What is a durable power of attorney?
A durable power of attorney (POA) is a power of attorney given in the event of disability (whether mental or physical) by one spouse and directs the other spouse how to handle certain business or monetary activities detailed in the agreement. Some instances of disability could include mental illness, physical illness, advanced age, drug use, alcoholism, confinement or disappearance.
While state law may grant spouses certain rights to act for the other spouse, some activities may or may not be covered. A power of attorney also helps spouses who may have separate ownership of property by giving the spouse the right to act on behalf of the incapacitated spouse.
Some examples of business decisions in real estate matters where the well spouse is not a co-owner (perhaps because the real estate was a premarital asset or for other tax reasons) and can act for the incapacitated spouse are:
- If the incapacitated spouse owns rental property, the other spouse can collect rent
- To pay real estate taxes for properties that may not in both spouses ownership
- To handle issues related to any mortgages
- To take out property insurance
Some other general business related functions a durable power of attorney can include:
- To sue on the collect of a debt
- To file for bankruptcy
- To write checks and do banking transactions
- To sell stock or other securities
- To file tax returns
- To manage retirement accounts
- To borrow money
- To make loans
- To make charitable donations
- To hire attorneys, accountants or other professionals
In the event state law did not allow a spouse to do any of the functions described above for its incapacitated spouse, a durable power of attorney signed by the incapacitated spouse before the disability (and notarized for validity) can come in handy in a family emergency.