For the leader
With people living longer these days, power of attorney is more important than ever. Power of attorney enables you to designate someone to act on your behalf when you are alive but unable to make your own decisions. If you need to make a minimum required distribution, sell a house or a car, or make a bank transfer and you cannot do so, someone needs to be appointed to act for you. However, before running this important document, you need to make sure that it works when needed. Here are eight mistakes to avoid:
1. I don’t have one
Although a will is often viewed as the basis of an estate plan, your power of attorney is more likely to be used more frequently and for longer. If you don’t set one up, it leaves a huge hole in your estate plan that can drain your family financially and emotionally.
2. Name the wrong agent
By appointing 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 that you choose someone who is trustworthy and able to get the job done.
3. Do not name a fuse
It is equally important to identify an alternative if your first choice fails to serve in due course. Otherwise, it is like you have no power of attorney at all.
4. Do not specify any specific powers
It is not enough to give your agent general authority to “act on your behalf”. The law requires that you give your agent certain powers to do certain things. Hence, it is important that you give it certain powers. If you intend to allow your agent to sell real estate, conduct banking, or conduct stock deals, make sure that your power of attorney gives them that specific authority.
5. Appointing agents to act collectively
Often times, employees want to name agents who should act together. While this seems efficient from a time management perspective, you should give each agent the opportunity to act independently. Otherwise, requiring two signatures for each transaction can slow down a process when quick decisions are required.
6. You cannot appoint a guardian for yourself
If your agent has not been given authority to act for you in a certain way, the only other person who can give that authority is a judge. When exercising a power of attorney, be sure to also indicate who will act as your guardian in case one needs to be appointed. A court must follow these directions and the process will be much easier for your family.
7. Don’t follow up with your financial institutions
Before relying on your power of attorney, check with your financial institutions to determine whether it is suitable for their purposes. Many large institutions require their own forms, and it is important to make sure what you have on-site meets their needs.
8. Suppose your authority extends beyond death
Once you die, the power of attorney will expire. This is the time when your will shines. Don’t just rely on a Power of Attorney to assist in the transfer of property to your intended beneficiaries.
To learn more about how estate planning can help your family, join Solak Legal’s next FREE online event, Wills & Trusts 101, on Wednesday October 21st at 4:30 pm. All registered attendees will be one Replay provided. Send an email to [email protected] to register.
The information in this column, 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. Legal readers should consult lawyers about their particular circumstances. Jennifer Solak provides legal advice to families and businesses and can be contacted at [email protected] or 713-588-5744.
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