Obtaining a durable power of attorney is one of the most important and powerful estate planning moves you can make. It allows someone who you appoint (referred to as your agent) to make decisions on your behalf in the event you become incapacitated. If you have no power of attorney, then your loved ones may not have the authority to make decisions on your behalf in case you become severely ill and/or incapacitated. If you do become incapacitated, a judge will likely need to get involved and appoint someone for this task. Going to court is an expensive and tedious process, much more expensive than appointing someone you love as your power of attorney.
A power of attorney (POA) is one of the most common estate planning documents, but it is also one of the most misunderstood. In this article, we will break down some of the common POA misconceptions and help you understand when, why, and what you need to create a valid POA.
POA Myths Busted
Misconception: Technology is great these days. If I can buy a car online, I can just create my own POA online. There is no need to speak with an attorney.
Truth: POAs are not a one-size-fits-all package. Each person’s situation is unique, and their needs in case of incapacitation are unique as well. If you use a cookie-cutter document, it may not cover specific transactions, or even be reflective of the language needed in your state. In order to conduct many financial transactions, specific language must be used to grant proper authority. The elder law attorneys at Michaelson & Associates create these documents regularly. We have valuable experience to tackle unique situations and can make sure you have all your bases covered.
Misconception: POAs are a one-and-done document. Once I create it, and I’m still happy with my agent, I will never have to touch it again.
Truth: Contrary to the popular myth, POAs should be updated regularly. Laws change and language changes. If you do not regularly update your estate planning documents, you may find out that your POA is not valid when it’s too little too late. Further, some financial institutions (such as banks) may not accept a POA that’s not been updated in the last few years for fear of a lawsuit.
Misconception: I do not want to make my POA active until I become incompetent.
Truth: This is commonly referred to as a “springing” POA. The timing of granting agency through a POA is a matter of personal preference, but granting immediate POA should be considered. A springing POA usually requires a finding of incompetency by at least one doctor and sometimes two. However, it’s happened in an emergency that a doctor does not sign off that you are incompetent. When you make your POA effective immediately, it removes the need for a doctor to declare you incompetent. It keeps your POA agent decisions in the family instead of up to a doctor.
Misconception: I don’t need a POA right now. I’m young and healthy, and I don’t have many assets.
Truth: Every person over the age of 18 should have an updated POA. You never know when something catastrophic may happen, so it’s important to plan ahead. You should always have a plan in place in the event that you become incapacitated unexpectedly. If you don’t have a POA in place, then you have no control over who will be making decisions on your behalf when you can’t speak for yourself. It is an expensive and time-consuming process for your loved ones to go through court to be appointed by a judge, and it’s a process that you can avoid completely by having an updated POA in place.
No matter your age or assets, POAs are essential documents to have. When creating your POA, it’s also important to consult an elder law attorney in your state. This is the professional who can examine your unique situation to create your POA, and keep it updated. Please do not hesitate to contact the elder law attorney team at Michaelson & Associates if you would like to speak with an attorney about creating your own POA.