You need a durable power of attorney in your estate plan. It is vital when you are unable to make financial or health care decisions for yourself. These documents can help you avoid a costly conservatorship proceeding.
terminology
The terminology in this area can be confusing. You, the “principal”, appoint your “attorney-in-fact” through a signed, dated, and notarized document known as a “power of attorney.” The attorney-in-fact is a “fiduciary” for the principal. This means that the attorney-in-fact must act in the best interest of the principal. Litigation often arises over this issue.
durable power of attorney
Tennessee law allows powers of attorney to be durable. This means that it works during a principal’s incapacity or disability. Historically, a power of attorney could not do this. You typically want a durable power of attorney.
name alternates
If possible, you should name at least one alternate attorney-in-fact. If the initial attorney-in-fact dies or is unable to serve, the alternate can serve. This is important as the document ages. I have seen cases where the document was over 30 years old. There was only one attorney-in-fact named: the deceased spouse!
only valid during lifetime
With few exceptions, powers of attorney only work during the lifetime of the principal. It is a common mistake for an attorney-in-fact to try and access the principal’s accounts after the principal’s death.
At death, banks will freeze the principal’s account and require letters testamentary or letters of administration before giving a person access to the funds. Only a probate court can grant letters testamentary or letters of administration. In other words, your family will need to go to probate court (Note: through proper estate planning, you may avoid the need for court after your death through beneficiary designations and/or a living trust).
The two most common, and most necessary, powers of attorney are a Durable Power of Attorney for Financial Affairs and a Durable Power of Attorney for Health Care. I discuss both of these below.
durable power of attorney for financial affairs
This document appoints an attorney-in-fact to manage your financial affairs. This can include paying bills, opening or closing accounts, purchasing or selling assets, changing beneficiary designations on accounts and/or life insurance policies, creating and funding a living trust and many other powers that you may, or may not, designate in the document.
durable power of attorney for healthcare
This document appoints an attorney-in-fact to handle your health care decisions. These decisions include consent or refusal to any procedure or treatment rendered by a physician or health care provider designed to diagnose, assess, or treat a disease, illness, or injury.
Additionally, the attorney-in-fact typically has the power to withhold or withdraw health care and allow a comfortable natural death during a terminal condition, donate organs, authorize an autopsy, and/or direct the disposition of remains. These are examples of when a power of attorney would extend past death.
I hope this post helped you get a better understanding of a durable power of attorney in Tennessee.
Frequently Asked Questions
