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.