You’re familiar with the basic concept of a Power of Attorney (POA). One of the first questions that might pop into your head is, do I need one? At some point in your life, you’re going to need a POA. And sooner is better than later.
When we sit down with new potential clients one of the first questions asked is, do you have POA? If you don’t, we strongly urge you to meet with an elder law attorney to have one drawn up. Times have changed. Having a POA is now the first step in regaining control or protecting your assets. Why? One answer: financial groups.
Within the last year, banks, stock brokerage firms, insurance companies and other financial groups have tightened down and demanded instructions to be spelled out in a POA, which your five-year-old POA may not do. If your POA doesn’t specifically mention you have stock or insurance policies, the companies aren’t talking until more information is provided.
More and more, financial advisers and elder law attorneys are dealing with financial institutions that won’t accept the standard POA. Instead, they want their own bank-approved documents used. These documents have to be reviewed and approved by the bank’s legal department, which is normally three states away, not downtown at the local main office. If you’re lucky, the reviewing process is just a few days. It could take longer, and involve more paperwork being mailed, faxed, or electronically transmitted.
It’s getting tougher, not easier, when dealing with these financial institutions. It makes for more hoops to jump through and it makes it frustrating for all involved (except the banks) when you’re working on a Medicaid application deadline. Time is money. You’re writing $6,000-a-month checks for Grandpa’s or Mom’s stay at the nursing home, and have been for six months or longer. You’re burning through Grandpa’s assets faster than you originally thought. These new delays can make a costly difference on when Medicaid is applied for.
Is there one particular person or event to credit with the change? No. It’s a just a sign of the times.
If you’re unsure what a POA does (and don’t want to admit it) a POA is created by an attorney and directs your representative to act on your behalf when you can’t handle your own affairs. The POA designee could be one spouse to another spouse, or a parent to a child, particularly if the parents are older and health is declining. In cases where the family is extremely close, it’s not unusual for two siblings to share POA for the parents. A close family friend can be designated POA. Designating a friend as POA happens more often than you think, especially if there are no children, nieces and nephews, etc… involved.
The strongest types of POAs include financial and medical /health care provisions. This way, your POA designee can have access to your medical files, and checking and savings accounts. Without the POA, the designee wouldn’t have access to your finances (checking, savings, stocks, etc…) or your banking business will be frozen until the courts appoint a representative called a conservator, who then dictates your business. And, in the worst case scenario, your family may have to go to court to get guardianship to manage your estate, and guardianship is not a fun thing.
If you don’t have a POA, we highly recommend getting one drawn up. The sooner, the better. You might ask yourself, why do I need a POA? I’m in relative good health today. That’s great, but what about tomorrow, or next month, or next year? Think of it as another tool in your preplanning tool kit, right alongside your will, trust, funeral arrangements, etc… As everyone knows, life can change in an instance. You could be in a car accident next week, or something as innocent as tripping on the rug and bumping your head tonight. What if you’re incapacitated and unable to handle your own affairs? Who’s going to pay the bills, and not just the hospital bills? The everyday bills – mortgage, car, utility – still need to be paid. That’s when the POA goes into effect.
Now, if you already have a POA, good for you. But like changing the batteries in your smoke detectors at home in the spring and fall when the time changes (you do do that, right?), it’s important to review them. There are various reasons for this. Life changes. You saw what happened to a friend at church or regular golf partner who didn’t have a POA, and realize you don’t want your family to go through that ordeal. You also might want to declare a new POA, or divide the responsibilities up between two children, not one. Or you read about some well-known celebrity whose legal documents weren’t updated for 10-plus years, and that makes your think.
The best – and strongest – type of POA would include financial and medical or health care provisions. This is done in case if something does happen to you, your POA designee can have access to your medical files, and banking business. Without the POA, the checking and savings accounts will be frozen until the courts appoint a representative, a conservator, who will manage your affairs. In a worst case scenario, your family may have to go to court to get guardianship to manage your estate, and guardianship is an expensive, time-consuming legal process.
Now is the time to do that.