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Know how a durable power of attorney can protect you

Posted in Investing, Uncategorized by Mark Cussen
August 23, 2008 12:26 AM - 1 Comments

Millions of Americans are more than willing to purchase life insurance on themselves and their loved ones in case of death, disability insurance in case of disability and long-term care coverage to cover assisted living expenses. However, many of them are not aware of simple legal document that can greatly aid their families in the event that they become incapacitated.

This document, called a durable power of attorney, allows a designated person to make decisions regarding your assets and property if you should become mentally unable to do so for any reason. Having one of these drawn up while you are mentally sound is highly recommended by both financial and estate planners. Failure to do so can result in the gross mismanagement of your assets, either due to neglect or to the actions of a judge-appointed conservator who may or may not have any idea what he or she is doing. The power of attorney should have a “springing” feature that outlines the circumstances under which the power will “spring” into effect. You can designate virtually anyone, from a trusted friend or family member to your financial advisor to make material decisions on your behalf if you become incapacitated. However, many experts suggest that a joint designation between a family member and an attorney or other professional financial advisor may be the best course of action. This combination provides both expertise and an emotional perspective-both of which may be needed to make the decisions that you would approve of. If you have assets in more than one state, then you will probably need to have your attorney draft a separate power in each state of ownership. Each financial institution should have a copy of the power as well, so that there will no contention regarding who is authorized to make transactions on your behalf.

A final note to remember with durable powers of attorney is that they do give virtually unlimited powers to the designee, powers which can only be limited with a revocable living trust. But the POA will allow the executor to handle any assets that are titled in the name of the trust. Therefore it is important to choose your designee wisely.

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  1. Melissa Indpls said:
    on September 25th at 12:30 am

    “Protect” is the key word here. There are tons of stories about POAs who turned out to be greedy and have used their POA as a “power to steal”. I’m not a legal guru by any means, just your average person who witnessed the mistreatment of an elderly relative’s trust by lying POAs and a lying trust allocator from a so called prestigious company. Oh yes, and a Will that mysteriouly disappeared! Know that you must bulk up your trust, etc. and provide for that if your wishes are not followed, or you are mistreated during your time of need, that no beneficiary you have listed shall receive their “payment” after you die, and have the inheritance left to charity or whatever.
    I hope this is clear. I know of a person who added a provision that they shall not ever be put into a nursing home, and if they are by their POA then the inheritance $ will go to a charity and not to the listed family beneficiaries.
    Secondly, I hear it’s expensive to list a home’s entire content in the trust and most people lean on their Will to take care of this. My relatives POAs took them to an attorney at the time they were ill/incapacitated, and had them sign everything over to them so they could be the POAs. Within months the relative was thrown into a nursing home and then put the home/contents up in an estate sale after the POAs took what they wanted. It was during this time the Will disappeared. Trust only yourself and put into writing, in the necessary legal documents, your wishes and how your health matters should be handled, etc.

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