Put Financial Power-of-Attorney at Top of Christmas Wish List
The importance of a financial power-of-attorney cannot be overstated.
I make it a point in all of my client meetings to stress to the client that, especially in times of crisis, having a properly drafted financial power-of-attorney can be the difference in whether or not you are able to protect your hard-earned assets in the event you ever have to enter the nursing home. This is because that often times when a loved one is entering a nursing home he/she will not have the mental or physical capability needed to execute important legal documents, such as a financial power-of-attorney, and thus are unable to take measures to protect his/her assets.
If, however, your loved one had a properly drafted financial power-of-attorney, the attorney-in-fact (who was appointed by the principal within the document) would be permitted to take the necessary actions on your behalf to protect your assets.
Many married couples feel that it is not necessary to have a financial power-of-attorney due to all of their assets being titled in both names. However, when we take a closer look at their assets, we often realize that all of their assets may not be held jointly.
For example, an IRA is not a joint asset as it can only be owned by one of the spouses. Likewise, insurance policies are often owned by just one spouse. No matter the length of the marriage a spouse is not permitted to speak to a financial institution regarding the accounts of the other spouse without authorization being granted from the other spouse through a properly drafted financial power-of-attorney.
Additionally, while it may be true that a couple’s residence is in both of their names, this does not give the husband or wife the ability to sign a deed on behalf of the other spouse if the other spouse is mentally or physically unable to do so. Thus, the ability to protect the house if the institutionalized spouse cannot sign a deed because of a mental or physical incapacity can be severely hampered.
I should also note that all financial power-of-attorney documents are not created equal. Often times these documents must contain very specific and detailed language in order for a financial institution, or the like, to grant full authorization to the attorney-in-fact.
A financial power-of-attorney must be created carefully and thoroughly and be sure to include, among other things, the ability to create revocable or irrevocable trusts, the ability to make unlimited gifts, and the ability to make gifts to the attorney-in-fact.
The only thing worse than not having a financial power-of-attorney when it’s needed is having a financial power-of-attorney that does not achieve what you need it to due to improper drafting. If you do not have one, make sure to put it at the top of your Christmas wish-list!
Chris Blair is a member of the law firm of Rokisky, Wilharm, Blair & Rokisky, elder law attorneys with offices in Wheeling and Weirton. If you would like to submit a question for publication, email it to email@example.com.