Most people think an estate plan should be focused solely on what happens to your assets after your death. However, disability, even for a short time period, is likely to happen to you at some point in your life. 1 in 4 twenty-year old’s will become disabled before they retire. Therefore, a Power of Attorney for Property is an integral part of every estate plan.
The person signing a Power of Attorney is the principal, and he or she grants power to an individual known as an agent, to make decisions in the principal’s behalf. Under Illinois law, the agent needs to be someone over the age of 18. The agent has power over financial assets, including bank accounts and real estate. The principal can expand or limit the powers granted under the Illinois statutory form. Typically, a Power of Attorney becomes effective upon signing so that the agent can act even if the principal is not disabled. Therefore, the agent chosen should be someone who the principal trusts absolutely and is capable of making responsible decisions. The agent is also bound by the law to act in the best interests of the principal. Signing a Power of Attorney ensures that if the principal becomes disabled and cannot make financial decisions, there will be no need to go to court to establish a guardianship.
If a person becomes disabled, and cannot make financial decisions, a guardianship proceeding will need to be filed with the appropriate court to handle those assets. However, there are significant costs in guardianship proceedings. Additionally, if the court deems a person disabled, he or she becomes a ward of the court. Therefore, the court has the ultimate decision-making power over what the appointed guardian can and cannot do, including selling property, distributing assets, etc. There are usually yearly court hearings to review accountings of the guardians’ s actions. Oftentimes, an attorney is needed to prepare those documents for court approval.
Disability can strike anyone at any time. Putting Power of Attorney for Property in place helps ensure your financial assets will be handled by the person you name as your agent outside of court supervision.
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