Why You Need A Power Of Attorney ?
An Estate Plan without a Power of Attorney for financial matters or a poorly drafted Power of Attorney can cost you thousands of dollars in conservatorship Court proceedings. The standard Power of Attorney may be more dangerous than handing someone a blank check.
A well-conceived Power of Attorney created by Advanced Legal Planning can solve both problems. Advanced Legal Planning has the expertise and experience to make sure your Power of Attorney gives your agent all of the powers he or she will need, while making sure those powers are sufficiently restricted to protect you and your assets.
What Is A Power Of Attorney ?
You can give an “agent” the legal authority to act in your name, to make decisions, and take actions on your behalf. The document granting this authority is called a “Power of Attorney.”
There Are Different Types of Powers of Attorney
There are two classes of Powers of Attorney
Financial Power of Attorney
Power Of Attorney Documents That Are Not For Medical Decisions Are Usually Referred To As “Financial Power Of Attorney.” These Cover All Matters Of Life Other Than Medical Decisions.
Health Care Power Of Attorney
Kansas Law Refers To A Document Granting Authority To Make Health Care Decisions As A “Durable Power Of Attorney For Health Care Decisions.” (Kansas Statutes 58-625) This Document Is Sometimes Called An “Advance Directive.”
Financial Powers Of Attorney Important
- Signing a Check
- Using a Debit or Credit Card
- Communicating with a Creditor
- Communicating with a Service Provider
- Going to the Bank
- Signing Legal Documents
- Retrieving Records
- Making Business Decisions
- Communicating with Government Agencies
- Dealing with a spouse
- Communicating with a minor child’s school
Is a Power Of Attorney Dangerous?
If you give someone a blank check, that person is authorized to take your money. If you give someone Power of Attorney, that person is likely authorized to do much more. There are three ways attorneys mitigate this risk.
Many attorneys supply a list of powers and have a client choose which powers to authorize. This tactic successfully limits risk. However, if one of the powers needed was not authorized, the act of getting the Power of Attorney has been wasted and Court intervention will likely be required. Advanced Legal Planning opts for other risk management techniques.
Most clients have family they trust to make financial decisions and family they do not trust. Before choosing any fiduciary (legal helper), it is important to be comfortable that person can be trusted to fill the position competently and with integrity.
Advanced Legal Planning distinguishes itself from many law offices. Our Power of Attorney documents grant all the powers that an agent may need. However, the use of these powers is restricted.
Each Agent is provided an “Agent’s Acknowledgment” prior to receiving power. This process makes sure that the Agent understands he or she
- Must act only in your interests
- Must make all actions in accordance with your Estate Planning
- Must keep records of their actions
- Understands any violation will lead to legal liability
An Agent under such restrictions will typically not accept an appointment unless he or she has your best interests at heart.
If You Have A Trust You Still Need A Power Of Attorney
A financial Power of Attorney is included with every Trust-based estate plan created by Advanced Legal Planning.
People who use Trust-based planning transfer most of their assets to a Trust. Those assets are controlled by a Trustee, and no Power of Attorney is needed. However, it is still advisable to have an agent authorized to act outside of the trust for the following reasons:
For tax purposes, it is sometimes advisable to leave retirement accounts outside of a Trust. For litigation purposes it is sometimes advisable to leave vehicles and other “Hot Assets” outside of a Trust. The Trust will instead be made a beneficiary, Transfer on Death recipient, or Pay on Death recipient. Power of Attorney is needed to deal with all assets left outside of Trust.
It is not uncommon for a person to forget to transfer an asset to his or her Trust. It is also common for Trustmakers to inadvertently buy new items or set up new accounts in their own names rather than the name of the Trust. An Agent under an Advanced Legal Planning power of attorney, may place the items and accounts into Trust and avoid probate.
It is not uncommon for a person, in his or her final illness, to receive an inheritance from a deceased sibling (or other person). An agent, who has authority to transfer assets to a Trust, should act quickly to move these assets into the Trust to avoid the need for probate.
Remember that Powers of Attorney can give authorization to communicate with government agencies, schools, spouses, and for many other day-to-day needs that have nothing to do with assets placed in Trust.
Immediate Vs. Springing Powers
sking a doctor to sign a note saying an unconscious person is incompetent to manage their personal affairs seems simple. However, any time a doctor is asked to make a determination with legal consequences, he or she thinks about liability. The doctor will consult legal counsel. Even when given the green light, doctors still may not be willing to comply.
When a Power of Attorney is needed, it is usually sudden and unplanned. Someone needs to be able to take over your day-to-day responsibilities quickly. Dealing with a doctor or dealing with Courts delays this process and can harm your health, your estate, and your family.
Powers of Attorney are often used while a person is competent and simply
- Gone on Vacation
- Gone off to College
- Gone for Business
- Gone for Service (i.e. Military, Missionaries, etc.)
You should only grant a Power of Attorney to an agent you trust. If the agent is trustworthy when you are helpless, then certainly the agent is trustworthy enough when you are well.
Case #1
Jennifer’s mother, Mildred, had just gone into a nursing facility. Jennifer is now a trustee of her mother’s trust and is caring for all of her mother’s needs. One day, Jennifer called Advanced Legal Planning upset that the investment broker says that Mildred’s IRA is not in the trust, so they won’t talk to her about it. The attorney assures her that everything is okay. IRAs are usually not transferred to a trust because of tax issues. However, the attorney has Jennifer pull out the binder that holds all of her mother’s estate planning documents. The attorney reminds Jennifer that her mother also appointed her as her agent in a “power of attorney” and that Jennifer signed an acceptance of that power some years ago.
Jennifer submits the power of attorney documentation to the investment broker, and now they are willing to work with her on her mother’s IRA.
Case #2
Kaycee’s husband, Bill, works in the oil fields. He is gone a lot, and his supervisor told him that he should do a power of attorney document so his wife can handle anything that comes up while he is gone. To save money, Bill used a ready-made form. It came straight out of Kansas statutes online, so he is sure that it is legal. Bill was injured in a work accident and will need skilled nursing care for the rest of his life.
Kaycee wants to do estate planning for Bill and for herself. She wants to ensure that their children will be taken care of if anything happens to her. The attorney at Advanced Legal Planning tells her that he can help her with “her” planning but needs to see the power of attorney to see if he can help with Bill’s planning.
Unfortunately, Bill did not grant the authority to do his planning for him. Now, Kaycee will have to go through expensive guardianship and conservatorship proceedings just to do their estate planning.
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