Don’t forget about Powers of Attorney
Drawing up a will can give you peace of mind but naming a power of attorney may be even more essential. While it shouldn’t be a choice of one over the other, having a will but not a power of attorney could create chaos if you become incapacitated.
Drawing up a will can give you peace of mind but naming a power of attorney may be even more essential.
While it shouldn’t be a choice of one over the other, having a will but not a power of attorney could create chaos if you become incapacitated for some reason.
It may even be more important to have a power of attorney because, if you are incapable of making decisions, you will need funds for your care.
While there are remedies to have guardianship established if a person without a power of attorney becomes incapacitated, it can be a complicated and lengthy process.
Guardianship can take months ore more, and in the meantime, no one is able to do anything with your finances. No one has access to your bank or business accounts, and no one has the ability to pay your bills or sell your property if you need money to pay for your care. All of these matters are held in abeyance and everything comes to a standstill.
It can be especially worrisome if you have children to support, but your finances can’t be touched until a court decides who has guardianship.
Appointing a power of attorney is not a complicated matter, and you don’t have to possess financial expertise to do the job, although the person you choose should be organized.
It is important at the outset to make sure that you know what you need to do your job well. That person may not need legal advice on an ongoing basis unless there are things that come up, but it’s important to get legal and accounting advice at the outset of your role to make sure things are set up properly and that you maintain proper records.
Many people don’t inform themselves about their obligations if appointed as a power of attorney. You should get a copy of the document, know what it says and what it means.
The power of attorney should make a list of the person’s financial holdings and update it when circumstances change.
For example, if tomorrow you start acting for your great aunt who has all of these assets, and then she dies in 10 years and has named a number of beneficiaries and most of those assets have been depleted, someone’s going to ask what happened. If you don’t have proper records, that’s where you can run into problems whether you’ve acted appropriately or not.
Make sure the person you name as a power of attorney is aware of it. I will often sit down with the client and the person they have chosen to answer any questions. If you don’t know you have been named until the person appointing you becomes incapable, then you have no real opportunity to ask questions.
It is a good idea for the attorney appointed (the person named in the document) should ask about how you should proceed if there is an incapacity. They should also know some details about banking and legal representation, who does the taxes and where is important paperwork, such as a will or insurance policies.
You can start to get yourself organized even if you are not formally acting as the attorney, and once there is a decline in their health or faculties you have already done some of the legwork. It is certainly much easier to manage things because you know where things are. If you are stepping in cold, then it can become really difficult.