If you need some clarity on what exactly a “durable power of attorney” is, and why it’s important to have one, watch the short video below.
Here I give you my thoughts on what can happen if you don’t have power of attorney, and why it makes sense to have one prepared in case you lose the ability to handle your own affairs.
Hope to see you soon!
(There is a complete transcript of the video below if you would prefer to read it.)
Hi, this is Andy Sykes. I am a Certified Elder Law Attorney, practicing at Sykes Elder Law in Pittsburgh, Pennsylvania. Today I’m speaking to you from our education center where we hold free estate planning workshops. Now today I’d like to share some thoughts with you about what is a Power of Attorney, and why you should have one.
What is a Power of Attorney
So first, what is a Power of Attorney? Well, it’s a document that you sign that allows someone else, and that person’s called your Agent, to handle your affairs, such as your banking, your property, your retirement accounts, and many other types of financial and personal affairs. I drafted one for a fictional client to show you what one looks like. So here’s my Power of Attorney for John Q. Public. On the screen I’m showing you the first page where John Q. Public names his wife, Mary, to serve as his Agent.
Now if she can’t serve, later down the page there are two successors, an adult son and an adult daughter that can serve if his wife, Mary, can’t for any reason. Now if you lose the ability to handle your affairs and you haven’t signed a Power of Attorney, a Court could come in and name somebody to handle your affairs. In many States that’s called a Guardian, that’s what it’s called here in Pennsylvania. In some States it’s called a Conservator, but whatever the name is that process of naming that person can take time. So in Pennsylvania where I practice it can take a month or maybe two months to get that person named and in place. And that process can also be costly. It’s certainly going to cost you more than it will to get a Power of Attorney drawn up. Once that person’s in place, the guardianship, if it’s in Pennsylvania, that person’s going to have ongoing Court involvement in their affairs. So in Pennsylvania if you want to pay the nursing home because you need nursing home care, then it’s going to have to be approved by the Court. So in many ways you’re going to have ongoing Court involvement.
Reasons to Have a Power of Attorney
Now the reasons to have a Power of Attorney are, first of all, you’re going to have somebody to manage your affairs, and that person is going to be the person that you choose, not somebody that a judge thinks you ought to have, it’s going to be your choice. Next, your Power of Attorney can go into effect as soon as you’d like it to. The one I made up goes into effect immediately. So let’s say John Q. Public is in an accident on a Sunday and he’s lying there in a hospital in a coma, his wife, Mary, can start right away on Monday paying his bills, authorizing admission to a nursing home, whatever he might need to be done on his behalf, she can start right away.
But really the most important reason to have a Power of Attorney is that if it’s done correctly it can spell out exactly what your Agent can do and can’t do. So your Agent, presumably a person that you trust, is going to be following your wishes, which might be different from what a judge thinks your Agent ought to have the power to do. Now a really good Power of Attorney is going to be tailored to your circumstances. And in particular I mean things like it’s going to spell out, for example, can your Agent make gifts of your money, transfer your money, during your lifetime? In some cases that’s really important. For example, if you develop dementia and you need to be in a nursing home, you might need to move some money around from your name to your wife’s name or your family’s name to protect those assets, to provide for your family, to qualify you for benefits, to save taxes, for just a lot of different reasons, you might have to have the ability to make gifts. In other circumstances, gifting powers would be inappropriate, so it’s going to depend on your circumstances.
Another example would be, does your Agent have the power to change beneficiary designations on your accounts? Sometimes that’s appropriate, sometimes it’s not. Does your Agent have the ability to access online accounts that you may have? All right. So many different ways your Power of Attorney has to be tailored to suit your individual circumstances.
Now I’ve been practicing elder law for many years and I’ve really found that the amount of money that you have or that your family has during your lifetime, or that your estate has at the end of your life, very often depends on what’s in your Power of Attorney. So it’s really important to have one, it’s really important to have one that’s well done. An attorney that’s experienced in estate planning or elder law can advise you about what ought to be in your Power of Attorney. The attorney can help you get it drafted and can help you get it properly signed.
So I hope you enjoyed this video. You can read more about estate planning and elder law and other topics on our website. Also, if you’re in the Pittsburgh area and you’d like to come to one of those free estate planning workshops, you can sign up on our website as well.