A power of attorney gives someone the ability to act on your behalf regarding assets and property. For more information see http://mgmlawfirm.net/what-is-a-power-of-attorney
There are three major issues when it comes to creating a power of attorney and three steps to ensure that yours is done correctly.
- Get yourself a power of attorney so someone can help you if you are unable to.
- Give that power to someone you can trust with your life savings.
- Give that person the right kinds of powers. Excluding certain items from a power of attorney could be disastrous.
The first point is taken with the second point together. I have had clients who are not social butterflies and are new to the area and have no one they would trust with their money. In this case, there are other ways to protect your assets in the event of your incapacity, but with a lot less flexibility.
Avoid being taken advantage of: Giving a power of attorney to someone who turns out not to be trustworthy leads to elder abuse, theft of funds, and worse. Know a person’s gambling habits, substance abuse problems, and family turmoils. If you are going to trust someone with your life savings, they should be able to have a frank conversation with you about these issues.
Why won’t the bank let my power of attorney act on my behalf? Powers of attorney must include very specific language for different assets. Some banks won’t even look at your power of attorney and require you to sign the one they have on file. ASK YOUR BANK! Real property, investments, business interests, IRAs, and Medicaid all require very specific language. Medicaid can be among the most important one for those over or approaching age 65 because your agent would be able to do Medicaid planning for you if you are incapacitated, saving your estate from being spent on nursing home or long term care.
I have seen and heard of disastrous situations where the power of attorney did not include all the powers that were needed and assets were lost unnecessarily. Talk to an estate planning attorney to make sure you are protected.