A Durable Power of Attorney Does Not Authorize An Agent to Settle An Estate (And Other Lessons)
A man (who I’ll call “Jack”), recently called me in a bit of a panic. His fiancé (“Jill”), with whom he had lived for many years in a home they purchased together, had been recently diagnosed with breast cancer.
Jill was starting chemotherapy the next day and he was concerned, not only about his her health, but also about the uncertainty of life if tragedy were to strike. What if Jill had a bad reaction to the chemotherapy and died? Would he be able to keep his home and other assets he and Jill had acquired together? Would he be able to settle her estate?
Jack and Jill did some research and decided that it was important that he have the authority to handle her affairs if she died. They also wanted to make sure that he would be able to keep the home they had purchased together, as well other property Jill wanted him to have.
So he contacted me and asked me to draft a durable power of attorney. “That’s all we would need, right?” he asked. The short answer is “no.”
Durable Power of Attorney Expires When Principal Dies
A durable power of attorney allows you to choose a person you trust to handle your financial affairs if you become incapacitated and can’t handle them yourself. If you don’t have a durable power of attorney and become incapacitated, a guardianship may be necessary. Guardianships are expensive and cumbersome and can be avoided with a durable power of attorney.
However, the agent’s power ends when the principal dies. At that point, the personal representative of the estate takes over to wind up the deceased person’s estate. The estate is distributed according to the decedent’s Will if he or she has one, or according to the Texas intestacy statutes if there is no Will. The power of attorney does not control.
The Importance of Seeking Legal Advice
The phone call illustrated the importance of seeking legal advice for estate planning matters.
Had this couple decided to forgo contacting an attorney, they would have probably prepared a durable power of attorney using do-it-yourself document preparation service, believing that it would have been sufficient to accomplish their goals.
Despite their research, they did not understand that the power of attorney expired at death or that it would not control the disposition of his Jill’s assets upon her death. Only a will can do that.
Without a will, Jill’s assets would pass through the state’s intestacy statutes. Since the couple was not yet married, Jack would have no inheritance rights to any of Jill’s property. For more information about how the assets of a single person are distributed, read about the Texas intestacy statutes.
The phone call also illustrated the importance of engaging in estate planning early.
I wrote an article last year about Rob Jaffe, a man who was unexpectedly diagnosed with primary amyloidosis, a rare blood disease that took his life in just 46 days.
Fortunately, two years before his diagnosis and death, Rob visited an attorney to have an estate plan made. This allowed him to focus on himself and his family at the end of his life, rather than worrying about whether his legal affairs were in order. He asked his brother to tell his story to impress on others:
how big a blessing it is to know — when their time comes — that they have everything in order, that they don’t need to stress or worry about how things they worked their whole life for are going to turn out . . . I would not want to waste a minute of my life now having to do estate planning or worrying that I live long enough to get documents filed or whatever garbage comes with it.
Tragedy and illness can happen to any of us at any time, so it is important that we be prepared. Had Jack and Jill planned early rather than waiting until an unexpected illness, they would have been able to focus on her treatment and recovery, rather than worrying about legal and financial matters while dealing with the stress of Jill’s diagnosis.