A power of attorney is one of the most foundational estate planning documents but you need to understand how to reap the benefits from using one and the restrictions placed on it. You may name one or more agents and typically this is an adult child to act on your behalf in a power of attorney document. You can choose a restrictive power of attorney such that the person is only capable of carrying out certain actions or you can choose a broad power of attorney.

In a power of attorney, you will allow this person to make decisions like paying your bills and managing your assets if you become incapacitated. The alternative, if something were to happen to you and you didn’t have a plan in place, was to allow the courts to appoint another person to make choices on your behalf. You need a power of attorney because you need a person to step in and handle these financial and other life management activities if something happens to you. If you expect too much out of a power of attorney and do not use other estate planning documents, however, this can be a mistake.

A financial institution is not required to accept a power of attorney since each institution can adopt their individual standards for accepting one. If the power of attorney was executed more than six months earlier, many institutions won’t accept it. Some require you to reaffirm a power of attorney from time to time in order for it to be accepted as valid. A person who is named as your agent still must prove that he or she is the person in the power of attorney and this can be overwhelming if they were not prepared to do so. Make sure that you sit down directly with your estate planning attorney and walk through the options to avoid these negative consequences.

 

Comments are closed.