Financial Powers of Attorney
protect yourself from financial problems with a power of attorney general
You can’t make financial decisions when you are incompetent. That is to say you can’t make financial transactions. Likewise, you do not have this power if you are seriously ill. Therefore, you need a financial power of attorney general. Even if you have no other estate planning documents. To sum up, this is an essential document.
effectiveness of power of attorney
The common law (judge made law) limited powers of attorney. That is to say they were only effective while a person is competent. As a result, they were of very little use in estate planning. However, under statute powers of attorney are durable. To clarify, now they are effective despite disability.
date of effectiveness
Client’s choose the date of effectiveness. However, powers of attorney general are effective immediately if desired. On the other hand, if the client wants them to be effective at actual incompetence they are called springing powers of attorney. However, I don’t recommend springing powers of attorney. In short, obtaining proof of incompetence causes delays in implementation. In addition, third parties fear inadequate documentation. Therefore, if you are deeply concerned about vesting your agent with these powers you should find an agent you trust more.
Certainly a financial power of attorney may be broad. For example, it could authorize the agent to act in all financial matters. That is to say it might list banking and real estate. Secondly it could list property, stock and other investments. In addition, it may list operating a business or handling digital assets. And it could list insurance claims and litigation. Moreover it could list retirement benefits, Medicare and Social Security. In contrast, it may be be narrow. For instance it may authorize only banking transactions. But, in my opinion, narrow powers of attorney defeat the purpose of estate planning protection. Therefore, I always recommend broad powers of attorney.
On the other hand an agent can only make gifts if the power of attorney specifically says so. Gifting is a necessary power in a proper estate plan. However, gifting should be limited to previous patterns of gifts. In addition, the value of gifts should be limited by the annual gift tax exclusion. To sum up it is best to allow the broadest powers to your agent.
Please see the following for additional information: American Bar Association Power of Attorney Page