Estate Planning Basics: Why Do I Need A Power Of Attorney?

Friday, January 25th, 2013

Recently, while I was waiting for a train, an older woman struck up a conversation with me.  She proceeded to tell me about her brother. He was divorced, in the hospital, and needed assistance with his financial affairs; but she felt helpless.  No one would talk to her or give her any information: not the company paying him a pension, not the bank, not even the local Social Security office.  She did not understand why.  But I knew why.  Her brother had never signed a Power of Attorney. 

 A Power of Attorney is a very important and powerful document.  It is the document in which you name someone to manage your financial affairs in the event that you cannot.  You are still alive, but incapacitated.  You may be mentally incompetent, you may be physically unable to go to the bank,  you may have had a stroke and are unable to speak on the telephone.  Or you may simply no longer want to deal  with investing your money or paying your bills.  The person named in the Power of Attorney can take care of it all for you.

The big question is whom do you choose for your Power of Attorney?  Obvious choices are a spouse, a child, a sibling, or a close friend or relative.  The main criteria is that it be someone you can trust completely.  After all, you are giving that person power over and total access to your finances.  I have heard stories of people who did not choose carefully and ended up having their money improperly managed and losing it all.  And that person took a generous fee for themselves for managing the money, even though it was all lost.  The point is to choose carefully, and if that means choosing two of your children or relatives  to act together so as to keep them honest, then do it.  

In summary, everyone needs a Power of Attorney.  Remember to carefully choose the person or persons named in it to act on your behalf.  And, do not wait until it is a crisis to sign a Power of Attorney-do it now  while you are still mentally competent and able to sign. 

Estate Planning and Elder Law Blog

Friday, November 30th, 2012

     Welcome to my blog.  A new topic will be reviewed each month.  If you have a topic you would like covered, have a comment, or a question, please email or call me.  The first blog will be posted on December 1, 2012.  It will deal with Powers of Attorney.

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