For The Leader
With people living longer these days, the power of attorney becomes more important than ever. The power of attorney is what allows you to name someone to act on your behalf when you are alive, but no longer able to make your own decisions. If you need to take a required minimum distribution, sell a home or a car, or conduct a bank transaction, and you are unable to do so, someone needs to be named to act for you. Before executing this important document, however, it is important to ensure that it will work when you need it. Below are eight mistakes to avoid:
1. Failing to have one
Although a will is often considered the foundation of an estate plan, it may be more likely that your power of attorney is used more frequently, and for longer. Failing to put one in place, leaves a large hole in your estate plan that can place a financial and emotional strain on your family.
2. Naming the wrong agent
By naming an agent to act on your behalf, you are giving them the keys to your financial and medical life. Because of the seriousness of this appointment, you need to make sure you choose someone who is trustworthy and capable to handle the tasks.
3. Not naming a backup
It is equally critical to name an alternate should your first choice be unable to serve when the time comes. Otherwise, it will be as if you had no power of attorney at all.
4. Not naming specific powers
It is insufficient to grant your agent general authority to “act in your place.” The law requires that you give your agent specific authority to do certain things, so it is important that you grant them definite powers. If you intend for your agent to have the ability to sell real estate, conduct bank transactions, or execute stock transactions, make sure your power of attorney grants them that specific authority.
5. Naming agents to act jointly
Often people want to name agents to act jointly, and while that may seem efficient from a time-management perspective, be sure that you grant each agent the ability to act independently. Otherwise, requiring two signatures for every transaction can slow down a process when quick decisions are needed.
6. Failing to appoint a guardian for yourself
If your agent is not granted the authority to act for you in a certain manner, a judge is the only other person who can grant that authority. Make certain that when you execute a power of attorney, you also name who should serve as your guardian if one ever needs to be appointed. A court is required to follow those instructions and the process will be much simpler for your family.
7. Not following up with your financial institutions
Before relying on your power of attorney, check with your financial institutions to ensure it will work for their purposes. Many big institutions require their own forms and it is important to be sure that what you have in place meets their needs.
8. Assuming your power of attorney extends beyond death
Once you pass away, the power of attorney becomes invalid. This is the time for your will to shine. Be sure not to rely solely on a power of attorney to assist with the transfer of any property to your intended beneficiaries.
To learn more about how estate planning may help your family, please join Solak Legal’s next FREE online event, Wills & Trusts 101, on Wednesday, October 21st at 4:30pm. A replay will be provided to all registered participants. Email Jennifer@solaklegal.com to register.
The information in this column, which was sponsored by Solak Legal as part of The Leader Expert Series, is intended to provide a general understanding of the law and not legal advice. Readers with legal questions should consult attorneys for advice on their particular circumstances. Jennifer Solak provides legal advice for families and businesses and may be contacted at firstname.lastname@example.org or 713-588-5744.