Top Reasons Everyone Needs A Comprehensive Power of Attorney
THE COUNSELOR
Volume 6 • Issue 8 • August 2016
The Counselor is a monthly newsletter of Hallock & Hallock dedicated to providing useful information on estate planning, business succession planning and charitable planning issues. In this month’s issue, we will look at the benefits of a comprehensive power of attorney. If you are interested in learning more about the ideas and processes discussed in this newsletter, please contact us for an initial consultation.
Many powers of attorney exist that are general in nature and can be more problematic than useful. However, done correctly, a detailed, comprehensive power of attorney provides many benefits.
The person receiving power by the power of attorney is called the "agent," and the agent is governed by what is called the "law of agency." Under the power of attorney, the law of agency determines how and to what extent an agent is authorized to act on behalf of the individual who has appointed the agent to represent him or her - otherwise known as the "principal." The proper use of a power of attorney depends on the reliability and honesty of the appointed agent, so it is important to choose someone who has these qualities. Unfortunately, we all know that people can be taken advantage of through undue influence, hidden transactions, or identity theft, especially at vulnerable times. This is one of many reasons why one individual authorizing another person to act on his or her behalf can be beneficial to avoid such misfortunes.
The following are some of the top benefits to having a comprehensive durable power of attorney:
1. Help you avoid the necessity of a guardianship or conservatorship.
Someone who does not have a comprehensive power of attorney at the time he or she becomes incapacitated would have no alternative than to have someone else petition the court to appoint a guardian or conservator. The court will choose who is appointed to manage the financial and/or health affairs of the incapacitated person, and the court will continue to monitor the situation as long as the incapacitated person is alive.
2. Provide family members a good opportunity to discuss wishes and desires.
When a parent or loved one makes the decision to sign a power of attorney, it is a good opportunity for the parent or loved one to discuss wishes and expectations with the family and, in particular, the person named as agent in the power of attorney.
3. Provides instruction for changes over time.
As people age, their needs change and their power of attorney should reflect that. Seniors have concerns about long-term care, applying for government benefits to pay for care, as well as choosing the proper care providers.
4. Prevent questions about principal's intent.
A well-drafted power of attorney, along with an advance health care directive/living will, can eliminate the need for family members to argue or disagree over a loved one's wishes. Once written down, this document is excellent evidence of their intent and is difficult to dispute.
5. Allow agents to talk to other agencies.
An agent under a power of attorney is often in the position of trying to reconcile bank charges, make arrangements for health care, engage professionals for services to be provided to the principal, and much more. Without a comprehensive power of attorney giving authority to the agent, many companies will refuse to disclose any information or provide services to the incapacitated person.
6. Allow an agent to perform planning and transactions to make the principal eligible for public benefits.
One could argue that transferring assets from the principal to others in order to make the principal eligible for public benefits--Medicaid and/or non-service-connected Veterans Administration benefits--is not in the best interests of the principal, but rather in the best interests of the transferees. In fact, one reason that a comprehensive durable power of attorney is essential is that a Judge may not be willing to authorize a conservator to protect assets for others while enhancing the ward/protected person's eligibility for public benefits. However, that may have been the wish of the incapacitated person and one that would remain unfulfilled if a power of attorney were not in place.
7. Provide immediate access to critical assets.
A well-crafted power of attorney includes provisions that allow the agent to access critical assets, such as the principal’s digital assets or safety deposit box, to continue to pay bills, access funds, etc. in a timely manner without court approval.
8. Provides peace of mind for everyone involved.
Taking the time to sign a power of attorney lessens the burden on family members who would otherwise have to go to court to get authority for performing basic tasks, like writing a check or arranging for home health services.
Conclusion
There are many benefits to having a comprehensive power of attorney, especially when done in conjunction with other essential estate planning documents such as wills and trusts. No one can predict what will happen in the future and what powers may need to be executed, which is why a comprehensive power of attorney is so crucial.
This Newsletter is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.