Many people take time to update their power of attorney during COVID-19. If you can find yours, you may find that it is many years old. Just because it’s old doesn’t invalidate it, but it can mean the person you name in it may have difficulty using it if necessary. This is because many financial institutions want a “fresh” power of attorney, one that has not been signed in recent years when Bill Clinton was in office.
The next time you re-examine your power of attorney, it is a good time to have a “fresh” look. Here are some key points to review and discuss with your real estate attorney.
Permanent power of attorney document
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Do you need a permanent or jumping power of attorney?
Your power of attorney is a powerful document. It gives the agent you designate (often referred to as the “real lawyer”) access to your assets. It is intended to be used in case of your incapacity; However, many lawyers draft powers of attorney for their clients that take effect when they are signed. This is known as a “permanent” power of attorney. It’s long-lasting as it is effective when signed and will outlive your later inability to use (if it occurs).
The other type of power of attorney is a “jumping” power of attorney that “comes into effect” only when you become incapacitated. Most people prefer a power of attorney initially because it is less daunting. However, a volatile power of attorney can be much harder to use as your agent has to convince your local bank representative that you are indeed incapacitated. The document describes how to determine if you are unable to work. However, many banks don’t want to have to make this decision in order to refuse to act, or your agent will have to involve your attorney, which can otherwise incur unnecessary fees.
Are there any ways I can address my concerns?
While a permanent power of attorney is a better choice for ease of use, many people still have concerns about using it. The concern about a permanent power of attorney is that it is valid and usable by your agent once it is signed. Some customers fear their named agent will clean them up if they are out of town on their first vacation after COVID.
First, if you have these concerns, you probably have named the wrong person as your agent. Second, to mitigate these concerns and risks, some law firms will keep the original powers of attorney in their will and will not pass them on to the named agent until it is demonstrated that you are incapacitated. Also, don’t forget that your nominated agent has a fiduciary duty to use the assets to your advantage and not to go shopping with your money. It is for this reason that you want to appoint someone who is trustworthy and able to handle fairly demanding financial matters. Don’t name your cousin who lives from paycheck to paycheck. You don’t want to try it.
Who should you name
Many people actually call their spouse their lawyer. If you’re not married or don’t like naming your spouse (it may be a second marriage), you can name an adult child or even a close family friend. Some customers designate a trusted advisor, e.g. B. a lawyer or an accountant.
Looking ahead, look at who you named in your old mandate. Is that person still the best choice? You may want to name someone younger than an aging family member.
Can you actually name several lawyers?
Check with your lawyer, but in most situations you can designate two people to act together as your actual lawyer. This makes administration a little more difficult, as both people usually have to sign documents. However, it may be worth it for your opinion. You should also designate an alternate agent if your initial selection is unable to act.
Remember that the named agent can only access the assets on your behalf. If you have trustworthy assets, the successor trustee named in the trust document will respond to your ineptitude. And don’t forget that the power of attorney is no longer valid when you die. It dies with you.
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