“Simple” is a word that is rarely used to describe the ins and outs of the law, so it's no surprise when people have questions about legal documents. Concerns about powers of attorney are especially common. Sadly, delaying a power of attorney is often the result of misconceptions about these documents, so we frequently receive calls from family members who are unable to assist a loved one after an accident or illness. We see firsthand how stressful, expensive, and time consuming it can be to navigate a crisis without the legal authority of a power of attorney. Are you unsure whether you should have a power of attorney? Keep reading for the answers to 6 FAQs on POAs.
1. Can't my family do all this without a power of attorney?
Believe it or not, family ties may not be much help to access a bank account, loan statement, or any number of other personal accounts and assets. For some people, this rule can be a source of endless frustration. For others, it provides massive relief. Although YOUR spouse/parent/child may not even think about doing anything untoward, rules are in place to protect those with relatives who would. Typically, relatives don't have access unless you legally give them access.
2. Why do I need a power of attorney if I'm healthy?
You never know when you will need it. The trouble with the “get it when you need it” philosophy is that the need is often unexpected. At this point, it can be too late to get a power of attorney because you may be unconscious or unable to understand what you are signing.
3. What can someone do with a power of attorney?
It depends on the document. All powers of attorney are not created equal, and some will give more power and flexibility than others. This is one reason to discuss your needs with a lawyer rather than simply downloading a “standard” form.
4. Is a power of attorney effective immediately?
Again, it depends on how it is written. A power of attorney is typically effective immediately, but it can be written to be effective only when certain conditions are met. If this change is made, it is called a “springing” power of attorney. No matter which type you choose, it is important to discuss the pros and cons with a lawyer to make sure it meets your needs.
5. Do I need a power of attorney AND a will?
A power of attorney can't be used once you have passed away, but a will can't be used UNTIL you have passed away. If you have just one or the other, there may be holes in your plan that cause more difficulty for you or your loved ones. For example, a power of attorney cannot avoid intestate probate proceedings. On the other hand, a will cannot give access to your funds in an emergency. These are just two of many reasons why it is important to understand what needs your planning documents will meet.
6. Do I have enough money (or assets) to need a power of attorney?
Some people feel that they don't need a power of attorney if they don't have many assets, but the value or number of assets doesn't matter. Without a properly drafted power of attorney, your accounts and statements could be out of reach during a crisis. This can lead to missed payments, late fees, credit damage, and more.
The truth is that a power of attorney isn't just for you...it's also for your family. It's hard to imagine being unable to manage your healthcare and finances but feeling helpless during an emergency can be even more difficult for both you and your loved ones. Do you have other questions about the benefits of a power of attorney or the risks of not having one? Watch our free Incapacity Planning Webinar or call us for more information about a free estate planning consultation.