We all need several estate-planning documents. One of the essential few is a financial power of attorney (also known as a durable general power of attorney). This document empowers a trusted agent to step in and handle our financial affairs if we become disabled, incapacitated, or incompetent. Without it, your family would need to file a legal action seeking approval from the court to act as your guardian or conservator\u2014a slow and expensive process at a time when speed is important.<\/p>\n
But while having a financial POA can be invaluable, it\u2019s only as good as the words contained within it. Unfortunately, many standard POAs are not comprehensive, leading them to omit useful provisions. Here\u2019s 10 of the more commonly overlooked ones.<\/p>\n
First, if you are incapacitated for any length of time, it\u2019s likely that your agent will need to interact with the tax man, either in the form of signing a tax return or something more involved. To make sure that your agent will be able to do that, your financial POA should have a clause empowering your agent to handle tax matters and speak to tax authorities on your behalf. <\/p>\n
Second, many people have the lion\u2019s share of their assets in investment or retirement accounts. Because of the money at stake, account administrators and retirement plan custodians are understandably cautious. They\u2019ll want to see specific authorization before giving your agent access. So, your financial POA should spell out what your agent can see and do.<\/p>\n
Third, an important tax strategy for wealthier individuals is to make regular gifts to heirs. If done right, these gifts reduce your taxable estate when you pass away, meaning that more of your money goes to heirs and less of it goes to the government. So, if you are considering a gift-giving tax strategy, your financial POA should say that your agent can start or continue giving gifts consistent with that strategy.<\/p>\n
Fourth, if you are incapacitated for an extended period, it can be helpful to give your agent the power to create or amend trusts for your benefit. Allowing your agent this authority maximizes flexibility when executing your estate plan. And it can come in handy if you don\u2019t have a will because while you can give your agent the authority to create or change a trust, you can\u2019t give them the power to make a will for you.<\/p>\n
Fifth, more and more of us will need long-term care (extended assistance with medical needs or daily activities, whether provided at home, via community services, or at a nursing facility). It\u2019s important to authorize your agent to make decisions about where and what kind of care you\u2019ll receive. <\/p>\n
Sixth, as touched on a moment ago, many of us will need extended care. Frequently a family member will provide that care at your home or theirs. They can do so for free, of course. But often it\u2019s better to pay them. If so, you will want your agent to have the authority to both hire and pay them.<\/p>\n
Seventh, as we get older, poorer, or both, we qualify for an increasing number of government benefits. But sometimes government agencies can be persnickety about whether an agent can do so on your behalf. To sidestep the problem, make sure that your financial POA grants your agent the power to apply for public benefits on your behalf.<\/p>\n
Eighth, a financial POA involves your agent providing a service, whether it\u2019s managing your finances, speaking with the government, hiring attorneys and accountants, and so on. In a real sense, it\u2019s a job. But frequently the agent is a family member. And sometimes that means the expectation is that the agent will donate their time and effort. Whether that\u2019s the case or not should be discussed in advance and spelled out in your POA.<\/p>\n
Ninth, like most legal documents, it\u2019s useful to explain how it will come to an end. So, a good financial POA should describe the mechanics for its termination. <\/p>\n
Such a provision is especially helpful if you have a \u201cspringing\u201d POA, which is a POA that restricts your agent\u2019s authority to times when you are incapacitated. For this kind of POA, it\u2019s particularly important to define when you\u2019ve become incapacitated and, similarly, when your capacity has been restored. A common practice is to require a doctor\u2019s note or, sometimes, the opinion of two doctors.<\/p>\n
Finally, your financial POA needs a last-in-time clause to address what happens if you have a preexisting POA. The clause should say that any POA executed prior to the current one is void. This eliminates the issue of how to handle dueling POAs, especially if an earlier POA authorizes an agent to do something and a later POA is silent on the same topic.<\/p>\n
This column is for informational purposes only and is not intended to be taken as legal advice. For your specific case, consult a lawyer.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" We all need several estate-planning documents. One of the essential few is a financial power…<\/p>\n","protected":false},"author":8,"featured_media":322001,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6],"tags":[],"class_list":["post-322218","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-opinion"],"_links":{"self":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/322218","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/comments?post=322218"}],"version-history":[{"count":0,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/posts\/322218\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/media\/322001"}],"wp:attachment":[{"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/media?parent=322218"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/categories?post=322218"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.saipantribune.com\/index.php\/wp-json\/wp\/v2\/tags?post=322218"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}