Whether you are young or old, healthy or sick, the Power of Attorney is a valuable document that allows you to choose who will handle your financial affairs, if you need help.
A Power of Attorney allows you to designate someone to handle your financial affairs, during your life. This will be critical if you are ever in a situation where you can no longer manage your own finances. For example, if you are ever sick or injured and you are unable to pay your bills or make financial decisions for yourself, the Power of Attorney is critical.
Without this document, financial institutions, banks, and the IRS will not release information or authorize anyone to access your account to assist you. In this situation your family, friends, or a hospital will need to ask a court to appoint a Conservator for you. The Conservator may not be the person that you would have chosen. It may even be a stranger. The court will require the Conservator to provide annual accountings and reports. This is an expense that can be avoided with a Power of Attorney document.
You must be very careful when appointing someone as your agent under a Power of Attorney, as the authority to act often goes into effect immediately, not just if you are incapacitated. When considering who to appoint as your agent, you must choose someone that you trust. You will be giving this person the power to handle all of your money. In the wrong hands, the power of attorney can be used as a "license to steal".
If you have any concerns about the person that you wish to appoint as the agent under a Power of Attorney, you should discuss your concerns with an estate planning or elder law attorney. He or she can discuss options to ensure that the document only goes into effect upon your incapacity.
One option is to execute a "Springing Power of Attorney". This Power of Attorney can include a provison that it will only go into effect upon your incapacity, as verified by a doctor. However, many financial institutions are reluctant to accept this type of Power of Attorney without further authorization from a court. Ultimately, you want the Power of Attorney to work when you need it. If you do trust the person that you wish to appoint, this is not usually recommended.
A second option is to ask someone that you trust, perhaps your elder law attorney, to hold the Power of Attorney document for you, until they receive valid proof that you are no longer capable of handling your affairs.
It is important to have an estate planning attorney or elder law attorney draft the Power of Attorney document. Although, you may find samples of this document online or at a store, there are numerous issues and consequences that should be reviewed before you sign this document. Without a comprehensive Power of Attorney document, you may not be protected, if and when it is needed. it is important to note that Power of Attorney is only useful during your life. All power to act under the Power of Attorney ends upon death.
Life is uncertain and you never know when you may need this critical document. If you do not have a Power of Attorney or you have a document that is more than a few years old, take the first step and contact an estate planning or elder law attorney.