A durable power of attorney is one of the most important estate planning documents you can have. It allows someone who you appoint (your agent) to make decisions on your behalf in the event you become incapacitated. If you have not appointed an agent then your friends and family may not have the authority to make decisions on your behalf. In that case, a judge may have to appoint someone for this task, which can require a court process that is expensive and tedious.
While a durable power of attorney (POA) is one of the most common estate planning documents, it is also one of the most misunderstood.
Misconception: Technology is so great now, there is no need to speak with an attorney, I can just create my own POA online.
Truth: POAs are not one-size-fits-all. Each person’s situation is unique. If you use a cookie cutter program it may not cover specific transactions. In order to conduct many financial transactions specific language must be used to grant proper authority. We create and update these documents regularly which gives us valuable insight so we can make sure you have all your bases covered.
Misconception: POAs are one-and-done documents. Once I create it I will never have to touch it again.
Truth: POAs are documents that should be updated regularly. Laws change and if you have not regularly updated your documents you may find out too late that your POA is not effective. Further, some financial institutions may not honor a POA that was not updated in the last few years for fear of a lawsuit.
Misconception: I shouldn’t make my POA active until I become incompetent (a “springing” POA).
Truth: When an agent may be able to act under a POA is a matter of personal preference. We often recommend an immediately effective POA. A springing POA usually requires a finding of incompetency by at least one doctor and sometimes two. However, there may be an emergency where a doctor will not sign off that you are incompetent. Making your POA effective immediately removes the need for a doctor to declare you incompetent. You also may not want to condition certain powers based on whether you are incompetent.
Misconception: I don’t need a POA, I’m young and healthy, plus I don’t have many assets.
Truth: Every single person over the age of 18 should have a POA. You never know when something catastrophic may happen. You need to have a plan in place to take care of you in the event you become incapacitated unexpectedly. If you do not have these documents in place then you have no control as to who will be making decisions on your behalf. It can be expensive and time consuming for your loved ones to go through the probate court to have one of them appointed by a judge.
POAs are absolutely essential documents that everyone should have and be updated regularly. At The Laiderman Law Firm, P.C. we focus on keeping our clients’ estate plans up to date with changes in the law and your family.
If you want more information, or have any questions, please contact the attorneys at The Laiderman Law Firm, P.C.