Many estate planning and elder law attorneys will tell you that the Power-of-Attorney is an absolute must have in order to effectuate a sound and complete estate plan. A power-of-attorney is a legal instrument created by an individual (known as the “principal”) that authorizes a person (known as the “attorney-in-fact”) to act on the principal’s behalf regarding his or her financial affairs. The attorney-in-fact has a fiduciary duty to act honestly, loyally and in the best interest of the principal at all times. This inexpensive document can be set up to take effect immediately upon execution of the document or in the future upon the happening of a certain event. A proper Power-of-Attorney would include the authority to make unlimited gifts, as well as the ability to make gifts to the attorney-in-fact. If you have an older Power-of-Attorney document, you should review it to be certain it includes these powers as the attorney-in-fact could be severely restricted by the absence of these provisions.
One of the first questions I ask when I meet with my clients is…”do you have a power of attorney in place?” Having the proper Power-of-Attorney in place is absolutely crucial when planning for the future and considering the potential of a loved one needing nursing home care. It would allow the attorney-in-fact to take any and every step possible to protect the assets of a loved one in the event he or she would need nursing home care. Many times a loved one will not possess the requisite mental or physical faculties in order to lawfully execute important documents prior to entering a nursing home. A Power-of-Attorney will eliminate this dilemma as it allows the attorney-in-fact to take the necessary actions to protect your hard-earned assets. If a loved one becomes incapacitated and does not have a Power-of-Attorney in place, lengthy and expensive court intervention will most likely be needed in order to effectuate a plan to protect your loved one’s assets.
Some of my clients, particularly married couples, feel that a Power-of-Attorney is not necessary as their assets are held jointly with a spouse or another individual. A closer look often times paints a different picture. Assets such as IRAs and insurance policies are typically only held by one spouse or individual. Despite many years of marriage, a husband or wife does not have the ability to discuss accounts with the financial institution where the accounts are held. Additionally, while it may be true that the residence of a married couple is in both names, this does not give either spouse the ability to sign a deed on behalf of the other to transfer the other’s interest. Thus, the ability to protect the house can be severely hampered if the institutionalized spouse cannot sign a deed because of a mental or physical incapacity.
Tragedies can happen at anytime. The importance of this document cannot be overvalued. Don’t wait until it is too late. Contact our offices for a free consultation to discuss your estate planning needs.