There are many legal documents that could be created by a trust and estate attorney. They’re all meant to help individuals and families get the results they seek. A power of attorney is potentially a very powerful document. It can do a lot of good, but it could also be misused and do a lot of harm if care isn’t taken.
A power of attorney is created by a person (the grantor) who is mentally competent, that allows another person or persons (the agent(s)) to do certain things for him or her or make certain decisions. They normally cover medical or financial issues.
A financial power of attorney allows a grantor to name an agent to make financial decisions and take actions concerning the person’s assets, debts, income and bills. This document can be as narrow or broad as the grantor wants. Financial decisions need to be made by one who is mentally competent. If due to age or disease that competence may be waning, it may be a good idea to have this document executed. If an individual loses competence and does not have a power of attorney in place, a guardian may need to be appointed to oversee their finances, which can take time and be expensive.
It’s critical someone trustworthy and competent in finances be chosen as the agent. You want to select someone comfortable paying bills, who is organized and available (the closer the better, generally). This person must also be trustworthy, especially if it’s a broad power of attorney enabling the person with wide access to assets and funds (a power of attorney could also be very narrow with access to one or two bank accounts to pay certain expenses if you wish). You need to make sure the power you give will be in the right hands.
- Bob is retired, widowed with four children and six grandchildren.
- Incapacitated by a stroke he’s unable to communicate and take care of his affairs.
- Through a power of attorney Bob designated his oldest daughter to take care of his financial affairs if he was unable to do so. She lives nearby and is good with money. She can sign checks to pay his bills and have access to her father’s financial accounts. This access will allow her to make informed decisions on his behalf. She’s able and willing to communicate Bob’s assets and liabilities with her siblings.
- Without a power of attorney, if Bob’s children would need to petition the court to have a guardian or conservator named if he lost competence. That person would make all decisions regarding Bob’s finances assets. This will cost the family significant time and money. Bob will have no say in the court’s decisions about who manages his affairs. Potentially family members and others could also dispute who should be the one controlling his finances.
A power of attorney can head off problems when done properly. They can also create problems if done incorrectly or not at all. We can help you make sure the right one is created for you and your family.
If you would like to schedule a consultation, please feel free to contact us at your earliest convenience.