Is It Important to Have a Power of Attorney?
If you have a will, you have a document to tell others what you want to happen with your property after you die. However, if you are incapacitated and cannot make decisions about your finances or health, you need a Power of Attorney, says Ohio News Time in the article “Do I Really Need a Power of Attorney?”
A Power of Attorney (POA) (technically called a “Mandate” under Louisiana law) names another person, referred to as an “agent” (the “mandatary”) to make decisions on another person’s behalf, known as the “principal.” The agent may need to manage the person’s finances, including paying a mortgage, utility bills and handling other money matters.
If there is no Power of Attorney, the family faces a series of challenges. They will need to go to court and apply to become their loved one’s curator (called a “guardian” in other states). This process becomes expensive and time consuming. Anyone applying to become a curator (guardian) needs to be vetted by the court and any large decisions made for the ward must be approved by the court. The court is not required to make a family member a curator, so it is possible for a person the family doesn’t even know to suddenly be empowered to handle their loved one’s finances.
It’s far easier to have a Power of Attorney created when you have your estate created. When you update your estate plan, you’ll also want to review and update your POA.
A Power of Attorney should never be a standard form, since few people’s lives fit into a standard format. For instance, you may want a POA to permit your agent to conduct all of your financial matters, but not to sell your home. You may want to name a specific person just to handle the sale of your home, if you are not able to return to living at home but will need to permanently stay in a long-term care facility. The POA is tailored to reflect your wishes and can be as broad or as narrow as you want.
It is also important to name “successor” agents. If the first person you name cannot or does not want to serve in this capacity, naming a successor agent will make the transition easier. In the event the successor does not want to serve, it may not be a bad idea to have a back-up to the back-up. In several real life situations, the failure for a person to hame a successor or alternate agent has led to my clients having to go through the process of interdiction. This can cost thousands of dollars in attorneys fees and court costs.
Speak with the people you are naming to serve as Power of Attorney to ensure that they know what their responsibilities will be and confirm their willingness to serve. It is also important to be realistic: if they are the same age as you, will they be able to serve? It may be better to name an adult child to take on this role.
In addition to the POA, everyone should have a Health Care Power of Attorney. This permits a named person, also known as an agent, to discuss your health with doctors and other providers and make decisions about your care. You’ll also want a HIPAA Release, so a person you wish has access to medical records.
The POA is often considered a simple add-on to an estate plan. However, it is actually a very important document – sometimes the most important document you have – to protect you while you are living. Without it, your spouse or adult children will have many more barriers to be involved in your care and make decisions on your behalf.
To learn more about estate planning and asset protection, read these articles: Doctors Say Not to Take Low-Dose Aspirin and Will Gift to Heir Be a Benefit or Burden? and How Do You File Taxes If Your Spouse Dies? and What If Account has No Named Beneficiary?
BOOK A CALL with me, Ted Vicknair, Board Certified Estate Planning and Administration Specialist, Board Certified Tax Law Specialist, and CPA to learn more about esate planning and asset protection.
Reference: Ohio News Time (Oct. 15, 2021) “Do I Really Need a Power of Attorney?”
