Judy Janetski’s article reminds us that Health Care Powers of Attorney (HCPOAs) are a critical component of an effective estate plan.
They are not, however, the only important power of attorney in the estate planning arsenal.
Equally important is the Generable Durable Power of Attorney (POA). A POA is akin to an HCPOA, but is for non-medical — primarily financial — matters.
In a POA, an individual appoints someone, often a spouse, family member or trusted friend, as his “attorney,” with authority to handle various financial matters.
A POA can be narrowly drawn to apply to only one, or a few specified matters. Most estate planning POAs, however, are broad in scope (hence their “General Durable” title).
In a broad POA, the appointed “attorney” can legally deposit checks into the signer’s accounts, pay the signer’s bills and other financial obligations, and handle the signer’s investments.
The “attorney,” however, is legally prohibited from using the signer’s funds for the “attorney” himself. The “attorney” must act solely for the signer’s benefit.
A POA can help a family avoid unnecessary expense, disruption and frustration. If a person becomes unable to manage his affairs without having signed an effective POA, the court will have to appoint a conservator for him. That conservator may not have been chosen by, and may have a much different financial approach than, his “charge.”
A POA, of course, is only effective when signed by a legally competent person. A person with Alzheimer’s disease, for example, might be able to create a legally effective POA in the illness’ early stages, but not as the symptoms become more severe.
The breadth and scope of most POAs dictate that a POA should be created only under the supervision of a competent attorney.
Particular care must also be taken in choosing the POA’s “attorney” — the person given the powers under the document. For that reason, only a very trusted, financially knowledgeable person should be named as the “attorney.” A devoted daughter who is a CPA, for example, may be a better choice than a forgetful husband with little money sense.
POAs, like HCPOAs, are only one piece of an effective estate plan. Because they terminate at the signer’s death, they should be drafted in conjunction with all other estate planning documents.
Contact your FOS estate planning attorney to create or review your estate plan, including your POAs.
