In 2007, pop singer Britney Spears had a highly publicized meltdown. Caught on camera shaving her head, attacking a paparazzo with an umbrella and otherwise calling her sanity into question, Spears’s father took steps to contain his 26-year-old daughter’s erratic behavior and protect her multi-million dollar estate. While today, Jamie Spears’s actions appear to have helped save Britney’s life and career, the legal expense and family strain it cost to acquire his court-ordered conservatorship could have been avoided.
All with a little estate planning.
Here’s the legal takeaway from the Britney Spears case: Probate and estate planning issues aren’t just for the elderly. And when it comes to the possibility of incapacity, a Durable Power of Attorney (DPOA) for asset management should be part of your estate plan.
What is a DPOA for Asset Management?
A DPOA for asset management is a power of attorney that grants someone (your agent) authority over your (the principal’s) finances. It can be revoked by you at any time, provided you are competent.
A well-drafted DPOA ensures your agent will act on your behalf, managing your assets the way you would. You can specify in your DPOA how broad the authority is and whether that authority is immediate or triggered by some event, such as a doctor certifying you’re physically or mentally incapacitated—after which the DPOA stays in place until you revoke it or die.
This durability is what makes a DPOA a powerful time- and money-saving estate planning tool.
In Spears’s case, a properly created and funded trust plus POA documents could have enabled her family to act quickly after her mental illness manifested. Regarding her financial matters specifically, a DPOA could have prevented the need for a conservatorship (which remains in place today), while protecting her assets with minimal, if any, court involvement.
Why Do You Need One?
Simply put, you need a DPOA to allow long-term management of your assets in the event you become disabled. An executed DPOA allows your agent to pay bills, sell and transfer (and therefore shelter) property, file and pay taxes, and continue other important financial activity. Without a DPOA, your incapacitation can force your family to wait months for a costly court proceeding to determine who should serve as your guardian and make financial decisions for you.
Many people mistakenly assume they don’t need a DPOA if they’re married and jointly own assets with their spouse. But while your spouse can automatically manage some financial affairs, there are often assets that require your permission to manage. A DPOA can cover you in all instances by giving your spouse or other agent the ability to act for you whenever necessary.
Choosing Your Agent(s)
While a DPOA offers many advantages, bear in mind it creates a principal-agent relationship that grants access to your financial assets. An estate planning attorney can write your DPOA so that your agent has the authority to manage your assets wisely, but won’t be motivated to abuse that authority. Choose someone you trust to manage your affairs with the same knowledge and skills you would. Discuss his/her selection in advance and get his/her permission before executing your DPOA. Also, name an alternative agent in case your first choice becomes unavailable.
Conclusion
It’s never too early to plan your estate. And while no one wants to think about being incapacitated, it’s a possibility for us all—even 26-year-old pop stars—especially as we get up in years.
A solid DPOA for asset management is a smart component to any estate plan. Combined with a revocable living trust, a DPOA can prevent the need for conservatorship and its associated trouble—e.g., long probate, public disclosure and needless contesting,
Or, to borrow from one of Spears’s biggest hits, with a DPOA, you won’t have to worry about the court taking a Piece of Me, regardless of your state of mind.
To learn more about creating and executing a DPOA for asset management, contact our offices. We’re here to answer any questions and can draft a DPOA that will ensure your wishes are carried out to protect your family, your assets and your peace of mind.