When Covid-19 symptoms escalate to the point of requiring a patient to be put on a ventilator, they are typically placed into a medically induced coma, which results in a period of incapacity rendering the patient incapable of making any decisions.

People often prepare for this by executing a durable power of attorney designating another person as agent to make financial decisions while they are incapacitated. (Similarly, Advance Health Care Directives are used to name agents to make medical decisions.)

Although the durable power of attorney is typically included as part of a person’s estate planning documents, it’s important to realize that financial institutions are often reluctant to rely on self-prepared or attorney-drafted forms. During a time of crisis, this can cause unwanted delays and complications.

Revocable living trusts, however, often do not cause the same type of issues. Your trust document can include provisions that automatically designate a successor Trustee in the event you are no longer able to act. Assuming your revocable living trust is properly funded with sufficient assets, your successor Trustee should be able to quickly step in and assist you with handling your financial affairs.

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A durable power of attorney allows you (the "principal") to name someone (i.e., your "agent") to manage your assets. This can be especially helpful if you become incapacitated and want to avoid having a conservator appointed.

In fact, most comprehensive estate plans prepared by lawyers include a durable power of attorney. Durable powers of attorney, however, have some disadvantages that revocable living trusts do not have. 

Probate

A durable power of attorney does not avoid probate at the time of death.

Fiduciary Duty

Agents under a durable power of attorney generally have fewer obligations than trustees of a trust, and are tasked with only typical fiduciary obligations. The agent under a power of attorney is also not required to act on your behalf.

Accountings 

Agents under a durable power of attorney are not required to keep beneficiaries reasonably informed, unless demanded by the principal or by court order.  In contrast, a trustee of a trust has an obligation to keep beneficiaries reasonably informed of the trust and its administration.

Acceptance by Financial Institutions

One practical downside of durable powers of attorney is that financial institutions are often reluctant to accept the document. Sometimes banks and other institutions have internal policies requiring their own forms be used. Assets titled in the name of a trust, on the other hand, typically do not have this problem as financial institution usually feel more confident in relying on trust documents.

A shorty, but a goody today. The Durable Power of Attorney is a legal document that allows you to name someone (also known as an "attorney-in-fact" or "agent") to make financial decisions for you. The Durable Power of Attorney can even be drafted broad enough to allow the agents to make gifts on your behalf or to transfer assets to your revocable living trust if you have created one. This document is only effective while you're alive. 

Why Do You Need One?

Most people only plan for death, but with advancements in medicine, it's possible to be alive for quite a while but be incapacitated to the point where you're unable to make decisions regarding your assets. Having a Durable Power of Attorney can help you avoid a court-supervised conservatorship and may allow your loved ones to act more quickly in the event that something happens to you and important decisions need to be made regarding your financial affairs.

Overlap With Trustees?

You may be thinking that the agent under a durable power of attorney would seem to have a conflict of interest with the Trustee of your Trust, but that is generally not the case. First, the agent under your Durable Power of Attorney is often the same individual that you've chosen to be your successor Trustee. Second, your Trustee deals with assets contained within your revocable living trust, whereas the agent under your Durable Power of Attorney principally deals with assets that are outside of your trust.

The Durable Power of Attorney is frequently a standard document that is incorporated into an estate plan, so don't be surprised if your estate planning lawyer includes one for you as well. Even if the cost of estate planning is outside of your budget, I encourage everyone to have a Durable Power of Attorney, as it is inexpensive to prepare and can even be found in the California Probate Code (Section 4401).

After the first real meeting, the estate planning lawyer may have additional follow-up questions. But at this point, assuming you've made some key decisions, the lawyer should have enough data to begin researching any issues (if any) and drafting your estate planning documents. A typical estate plan in California consists of the following documents:

1. Revocable Living Trust
2. Pour-over Will
3. Durable Power of Attorney (Financial Decisions)
4. Advance Health Care Directive
5. Assignment of Assets
6. One or more real property deeds

Draft Documents

After an initial draft of the documents have been prepared, the estate planning lawyer will typically send them to you via e-mail or regular mail so that you can look them over and ask any questions you may have. Alternatively, you may wish to set up an appointment to go over each document with the guidance of your lawyer. This meeting doesn't need to be in person, and can be over the phone.

Revisions

If during your review you notice things that you would like to change or things that don't accurately reflect your wishes, now is the time to tell the lawyer so that he or she may update the documents before you sign them. The estate planning lawyer may re-send you the updated documents to ensure that the content has been revised to your specifications.

The end result should be a set of draft documents that is ready for signing, witnessing and notarizing.