Power Of Attorney

I have been asked over the years what is the most important document for one to implement when doing their estate planning? My question to the person asking the question is what would happen if with no warning your spouse or parent had a stroke and became completely incapacitated? What if you are living on distributions from your spouse's retirement account? What if you are using your mothe's IRA account to pay her bills? If you do not possess a power of attorney that is comprehensive and specifically allows you to access these accounts then you would be in quite a pickle. In fact, you would be forced to go through a protracted conservatorship or guardianship proceeding that could take three to six months in order to gain access to their assets.

The durable power of attorney is a terrific management tool that is available to anyone who implements such a document prior to a disabling event. Keep in mind the power of attorney ceases to exist when your loved one passes away. At that time, the will becomes the controlling document with regard to the assets contained in the estate.

A power of attorney is a document in which a person [known as the principal] names an attorney in fact [who is known as the agent] and grants the agent the legal authority to act on the principal's behalf regarding any number of specific matters covered in the document. Do not be confused by the fact that the document is called a power of attorney. The agent need not and usually is not the family's attorney. In most states naming an agent to make decisions about health care is accomplished in a separate and distinct document known as an advanced health care directive. The term durable means that the power of attorney remains in effect even after the principal becomes incapacitated. For estate planning purposes, I would suggest that the power of attorney become effective immediately and continue even after the person known as the principal becomes disabled. It is important to remember that for a power to exist such as the right to borrow money from your retirement plan, lease your residence, or make a gift, it must be specifically stated within the framework of the document.

You can write a power of attorney that springs into effect after you become incapacitated. This is called a springing power of attorney. I do not recommend that most people implement such a document. The reason is that you are putting the onus of burden on accepting the power of attorney on the financial institution or a third party. The question is how do you determine whether the power of attorney has actually sprung into effect? In such cases the agent may need to secure physicians' certificates and reports to verify that the power of attorney has sprung into effect. Many physicians may be reluctant to certify one's incapacity. It also makes it impossible to use the power of attorney if a senior citizen is out of town, under the weather, or just wishes to have the power holder perform a task using the document. For this reason, I suggest making the power of attorney effective immediately so that your power holder is not thwarted by a third party to the transaction. Acceptance of the power of attorney by third party is crucial. The power is only valuable to the extent that the agent is permitted to use it to act on the principal's behalf. Fear of potential liability on the part of the third party or institution can cause them to balk at recognizing your power of attorney. You don't want to be placed in a position where you must go to court to enforce the document. Make certain that the power of attorney is specific and enumerates each and every power that the power holder shall have on your behalf.

Powers of attorney often have a shelf life. If your love one's health begins to decline or if three to five years have passed since your power of attorney was last updated, it would be wise to consider visiting your estate planning and elder law attorney to update the document. Selecting the correct fiduciary or agent in this case is extremely important. The agent that you select must be totally trustworthy and someone that gets along with the members of your family. In some cases, you may want to select two people acting either jointly or individually. Where there is discord within the framework of your family you may want to select a neutral third party either as the agent alone or to act in conjunction with a family member who you have selected as your power holder. The person or persons that you select should have the time and energy to look after your financial affairs. They should also be someone who is familiar with you and your family members. An alternate power holder or two should be named in the document in the event that the person that you have selected is unable to continue to serve as your agent, becomes disabled, or dies. One of the most important powers to include in your power of attorney is the right to make gifts known as a gift giving power. This power will permit your agent to continue making gifts on your behalf if there is a tax or a long term care reason to do so. It also will allow them to engage in eldercare attorney to prepare an elder care game plan in order to preserve and protect your assets from a long term care stay using medical assistance planning.

The most important reason to utilize a durable general power of attorney is for management purposes. The document should not look like a cookie cutter form. It should be tailored to your special needs and situation. For example, if you have a pet you would want certain specific powers permitting your power holder to deal with the pet in the event of your disability. A typical well written durable power of attorney should range between 10 and 20 pages in length.

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