A young couple recently agreed to buy a house from her grandmother. Negotiations were made, a contract was signed and closing was set. On the eve of closing, grandma died. The closing has yet to go through.
Most of us are often aware of a will and what it does-at least we generally have some idea. But many people might wonder what a power of attorney is, how it works and why it is necessary to have one alongside a valid will.
When you cannot act on your behalf
As long as we are alive and able to act on our own behalf, a power of attorney is not necessary. But if something happens that limits our capacity to make decisions--a catastrophic illness or something such as dementia--a power of attorney gives an appointed person a legal right to make decisions for us.
In the above scenario, grandma had dementia and was confined to a nursing home. Mom and Dad had power of attorney and were going to sign closing papers for their daughter on grandma's behalf.
Why couldn't they still do that?
A power of attorney allows someone to make financial decisions for us; but once we die, the power of attorney is no longer valid. The basic reason is that as an appointee, we are standing in place of the person we are representing. Once a person has died, there is quite literally, no longer anyone to stand in for.
A power of attorney ends with death, and the will then takes over. In this case, the will left the house to several grandchildren. In order for the sale to be completed, the will must be probated, and that portion of the estate settled before closing can take place.
Both documents are essential for protecting our assets--both before our death and after. If you have questions about how to handle your current assets and your estate, talk with a qualified estate planning attorney.