Almost everyone who creates an estate plan in Colorado includes a durable power of attorney. A power of attorney is an important type of legal document. Through it, you can give another person or organization the legal right to represent your interests and make decisions for you. To help you learn more about durable power of attorney documents and how they play a significant role in your estate plan, here are some key issues you should understand.
Power of Attorney
Any mentally competent adult in the state of Colorado can create a power of attorney. As long as you are at least 18 years old and of sound mind, you can create, revise, or revoke these documents when you choose.
A person who creates a power of attorney is called a principal. The person, or organization, you choose as your representative is known as your agent or your attorney-in-fact. Powers of attorney can only be made in writing and must meet specific legal standards as required by Colorado law.
Durable Power of Attorney
A power of attorney is designed to give your agent the ability to make decisions in your place. Through the document, your agent can act as your voice. Should you lose your voice and be unable to make decisions, your agent’s authority to act is also curtailed. Agents acting under power of attorney lose their ability to represent the principal’s interest if that principal becomes incapacitated.
However, there is a significant exception to this general rule. You can create a durable power of attorney that will allow your agent to continue to act on your behalf even after you become incapacitated. Durable powers are very important, therefore, if you are looking ahead to the possibility of losing your ability to make choices and need someone who can protect your interests.
Hot Powers of Attorney
You might have heard about so-called “hot powers” in Colorado. As of 2010, agents must be granted specific authority to make certain types of decisions in the power of attorney document. If you make a power of attorney that doesn’t specify that the agent has the authority to make these types of decisions for you, that agent is prevented from doing so.
The “hot powers” you need to specifically address in your power of attorney document cover several areas. They include, for example, an agent’s ability to make a gift using your property, change a right of survivorship, or change a beneficiary designation. Because these powers are specifically addressed by Colorado statute, you will need to speak to your estate planning lawyer about what topics are covered, and how you can grant your agent the ability to act for you in these areas.