In estate planning, one common tactic individuals consider to avoid probate is adding their children…
If you are asked to serve as someone’s power of attorney, you’ll need to understand what they are asking you to undertake. If you are asking someone to be your power of attorney, you should know what it is you are asking them to do. Don’t be surprised if someone is reluctant; it’s a big responsibility.
A power of attorney is a significant role in settling an estate, and this recent article from the Lubbock Avalanche-Journal, “Five common myths about powers of attorney” addresses the misconceptions.
- There’s just one uniform power of attorney document. No, there are many types. However, they can vary by state. Talk to an experienced estate planning attorney to draft a document to meet your specific needs.
- It’s OK to sign a power of attorney, even if I lack mental capacity. No, to be valid, the person granting the rights (the principal) must have mental capacity to execute the document. A power of attorney can be valid for an individual with mental incapacity, provided the document was signed before the occurrence. That’s a key reason to have a durable power of attorney in place.
- A durable power of attorney and healthcare power of attorney are the same thing. No, a durable power of attorney grants rights to an agent to act on your behalf, regarding your assets. These rights can be general to all assets for an unlimited time, or the POA can be limited as to the time frame and assets included. A medical power of attorney grants an agent the authority to make medical decisions on your behalf.
- Senior citizens are the ones who need a power of attorney. Not true, because accidents and unforeseen illness can strike at any age. You need to have a plan in place to ease the burden of one aspect of an already stressful and complicated situation. Don’t assume your spouse has automatic power to make decisions on your behalf. It can be much more difficult, unless you have given them the power of attorney.
- A power of attorney can be used to handle my relative’s estate at death. Again, not true. Although there are other ways to structure an estate to avoid probate, a power of attorney isn’t one of them. A power of attorney lets the agent to stand in the place of the principal to make decisions. It doesn’t continue beyond the death of the principal.
A power of attorney can be an important tool in your estate plan. However, it has to be used correctly, and the right person has to be selected to handle the tasks. Talk with your estate planning attorney about your selection; they will have insights that will make the selection process easier.
Reference: Lubbock Avalanche-Journal (March 15, 2019) “Five common myths about powers of attorney”