Don’t Make These Mistakes In Your Powers Of Attorney
A financial power of attorney is an important document in your estate planning arsenal. This is a power of attorney (POA) that allows whomever you designate, to have full control over your financial affairs, in the event you aren’t able to do so for yourself.
What Your POA Does
A POA can be a vital document. It can ensure that during the time you are incapacitated, that your mortgage gets paid, the kids’ tuition gets paid, contracts get signed, and that everything in your personal financial life runs like normal, as if you were there to do it yourself.
Your POA will designate someone to act as you (and despite the name, it doesn’t have to actually be an attorney). When and if you recover, and are again able to handle your own affairs, the POA will terminate, and you can again handle your own affairs—all without court intervention or a judge’s order.
You can get a POA anywhere on the internet. But you shouldn’t do that. That’s because you can make big mistakes when drafting a POA. Here are some common ones that people make (usually, people who haven’t gotten the help of a good estate plan attorney).
When Does Springing Happen?
A springing POA is one that only takes effect when a designated event happens, or when certain parameters are met. At that point, the POA “springs” into effect. This can be helpful…unless the events that are supposed to trigger the POA springing into effect, aren’t clearly stated.
Make sure that your POA is clear about what condition you must be in, or what events must happen, to bring the POA into legal force and effect.
Giving Away Property
Sometimes, your chosen agent has to give your property away. Maybe it’s to buy loved ones presents. Maybe property has to be gifted away, to avoid taxes, or to keep eligibility for need based government programs. Gifting is, after all, an important part of the estate planning process.
But make sure that your POA is clear about when and if and how the chosen agent can gift property away. You don’t want all your property given away, or given away for no good reason.
Many POAs don’t name successor agents. What if your chosen agent predeceases you or your incapacity? What if your chosen agent simply becomes too busy, or has now moved out of the state? A good POA names a successor agent, so that if the first agent cannot serve, the POA can still be carried out.
Your agent cannot do things with your property that violate other contractual documents, such as shareholder agreements, LLC management agreements or marital settlement agreements. Make sure that your POA limits your agent and that important contractual documents are accessible by your agent, so he or she can see what the requirements in those documents may be.
Don’t handle your estate plan on your own. Call the Torrance will and estate attorneys at Samuel Ford Law today for help.