What is a 'Power of Attorney'?

Texas law allows a person (known as the “principal”) to create various types of “Power of Attorney,” which can take effect immediately or only upon the principal’s injury, illness or incapacity. Using a “power of attorney,” the principal appoints another individual (known as the “agent” or “attorney in fact”) who will be authorized to handle the principal’s financial affairs or make medical decisions for the principal. These powers of attorney can be as broad, or as limited, as needed in anticipation of future events. Powers of attorney are one method to protect yourself, and your loved ones, in the event of future injury, illness, or incapacity; in particular, making these decisions in advance can greatly aid you and your family in avoiding potential misunderstandings or disagreements, and in seeking assistance through Medicare, Medicaid and similar programs. An agent under a general power of attorney can alter the principal’s affairs in a number of ways without the principal's prior knowledge or actual consent, including for example: (a) changing beneficiary designations on insurance policies, bank and brokerage accounts, or retirement plans; (b) selling or transferring the principal’s property; or (c) withdrawing money held in the principal’s accounts. Because of the potential for “abuse” by an agent, careful thought and planning are recommended when making decisions concerning a general power of attorney.

Can I use a 'General Durable Power of Attorney' to avoid Probate?

No. A Power of Attorney automatically terminates when the principal dies. Therefore, your Agent under the General Durable Power of Attorney cannot use that instrument to transfer your property to your heirs (or otherwise sell or dispose of your property) after your death.

Why would I want a 'General Durable Power of Attorney'?

A "General Durable Power of Attorney" permits your agent to handle your financial affairs and manage your property. It can be a very powerful Estate Planning tool, particularly when it only becomes effective upon your physical or mental incapacity. Essentially, such a Power of Attorney will permit your Agent (usually a close and trusted relative) to have access to your property and make decisions about how to manage your finances. For example, if you need to enter a hospital or nursing home for an extended period of time, your Agent will be able to access your bank accounts and deposit your retirement or other benefit checks, so that he can pay your mortgage, car notes, or other debts (including medical care expenses). Additionally, your Agent can make decisions concerning your finances that may enable you to qualify for health care benefits. For example, using a General Durable Power of Attorney, your Agent can create a "Miller Trust" (also called a Qaulified Income Trust) to help you qualify for long term nursing home benefits under the Medicaid program.

Why should I have a 'Medical Power of Attorney'?

A "Medical Power of Attorney" lets you identify persons who can made medical decisions on your behalf before you become ill or incapacitated. Although Texas law will permit one spouse to make decisions for the other spouse, problems can arise when both spouses are involved in an accident or your spouse cannot be reached in an emergency. Using a Medical Power of Attorney, you can designate "alternate agents" - persons who can make medical decisions for you in the event that your spouse is not available or able to act on your behalf. A Medical Power of Attorney is also important if you are single and have multiple relatives, because it permits you to choose which person should have priority in making health care decisions on your behalf. By designating a single individual (with appropriate alternates), you can help avoid conflict between your relatives should they be presented with difficult decisions concerning your medical care.