Powers of Attorney

Powers of Attorney for Disability Planning

Disability planning is an important aspect of estate planning. Fortunately, there are legal documents called “Powers of Attorney” that allow a person (called the “Principal”) to give authority to another person (called the “Agent” or “Attorney-in-Fact”) to handle incapacity situations. If the power of attorney is a well-drafted “durable” power of attorney, this delegated authority can be a cost-effective substitute for a court-appointed guardian or conservator. This is extremely desirable because court-administered guardianships and conservatorships are quite costly, time-consuming, and can severely deplete the incapacitated person’s financial resources.

Death is viewed as inevitable. However, few people envision a period of prolonged incapacity. They also do not realize the many financial and personal management problems that can result when an incapacity does occur. At any given age an individual is much more likely to become incapacitated than to die. Many people who suffer serious illnesses do eventually recover. However, their incapacity makes it difficult, if not impossible, to manage their financial and personal affairs. Therefore, disability planning must be considered an essential component of an overall estate plan.

Without the benefit of a well-drafted durable power of attorney or trust, the only solution for dealing with an incapacitated individual’s assets is to have a court appoint a conservator to manage their assets. While trusts can be used to manage an incapacitated individual’s assets, trusts fall short in their ability to handle the many personal decisions and health care choices that have to be made on behalf of an incapacitated individual. The major areas that should be covered by powers of attorney are (1) financial decisions, often in coordination with a living trust, (2) personal care decisions, and (3) health care decisions.

The Arizona law for durable powers of attorney can be found at 14-5501 – Durable power of attorney; creation; validity (azleg.gov) The Arizona law authorizing health care powers of attorney can be found at 36-3221 – Health care power of attorney; scope; requirements; limitations; fiduciaries (azleg.gov)