When people talk about “estate planning”, it’s not surprising that many think of a will, as in a Last Will & Testament. Images come to mind of solemn looking people in a wood paneled office, looking on as an attorney reads the “who-gets-what” part of a document that says what someone wants to happen to their money and possessions now that they have died. Wills are important, as they are the instructions from someone no longer here, of what to do with their earthly possessions. There is another estate planning document that is arguably even more important than a Will, and that is the Power(s) of Attorney. The POA is the document that describes what you want to have happen, and who you trust to make it happen, in the event you cannot do it for yourself.
First, let’s be clear about something: the POA is the legal document itself. The trusted person (the fiduciary) is the agent under that POA document. Although it is common for people to say, “I’m the POA for (this person)”, it would be more accurate to say, “I’m the agent under a POA for (this person)” or “I have power of attorney for (this person)”.
What makes the POA document so important? It’s the one that gives you peace of mind in the worst possible situation, when you are incapacitated, at your most vulnerable, and with important tasks and decisions to make. Who’s going to pay your bills if you are in a coma? Who is going to make sure your property (your house, car, wallet, purse) is secure and safe until you’re able to do that for yourself again?
Another thing to make clear: in the state of Washington, it is common for there to be two Powers of Attorney. There is the Power of Attorney for Financial Decisions, and the Power of Attorney for Healthcare Decisions. The agent (trusted person) under those powers of attorney is not always the same person.
Who needs a power of attorney? Certainly, anyone who is undergoing events in life where they would like the peace of mind that comes from knowing that they have a trusted person to look after their things. People with responsibilities need to have a plan in place to keep things going in the event of an emergency. This often means the folks of the “sandwich generation”, old enough to have children, co-workers, aging parents, and others that depend upon them. However, anyone over the age of majority needs to at least have a POA for Healthcare Decisions. (More on that in a separate article?)
The justification for granting power of attorney to someone you trust is not only for dire circumstances. Convenience is a good reason to have a POA too; wouldn’t it be nice to have someone ready and able to take care of things for you while you’re on that cross-country road trip?
If you’ve been thinking that setting up a POA would be a good idea, but are not sure when to start, here’s a tip: do it now. This gives you time to educate your fiduciary. Also, a power of attorney document contains words like “I (insert your name here), being of sound mind and judgement…” Don’t wait until those words are no longer true! Also, know that if you are incapacitated without a POA in place, the options for your family or friends to try to help are significantly limited. Financial institutions want to see that POA with your signature on it before they let anyone that is not you touch your money. Remember, your POA and the powers it grants, ends at the moment of your passing.
It’s also important to think of your estate planning documents, your POA being one of them, as a kind of ever evolving set of instructions that you’re leaving behind. Consider that as your life changes, your instructions probably need to be updated as well. If it’s been a decade since your last estate planning was done, please call your attorney and schedule an appointment to review your plans.
The information in this article is not intended to replace the advice of an attorney. If you do not have a POA and you want the peace of mind that comes from having a good plan in place, contact a licensed professional and invest in good legal advice. Give yourself and your family the gift of peace of mind.
Profiducia Services Inc.