If something happens while you are alive, that makes it
impossible for you to handle your financial affairs, sign legal
documents or communicate your wishes to others, you could have trouble
in many ways. Without a properly executed Power of Attorney, your family
may need to get a court order just to handle your affairs. These can
cost plenty and waste months of time.
Even though a power of
attorney is a relatively simple document and is readily available from
many sources, I am still amazed at how many families and individuals do
not have one in force. Follow these simple guidelines and make sure that
you are protected should anything ever happen that would cause you to
Seven Factors To Consider:
1. Your Agents:
One of the most important decisions with a power of attorney is your
selection of agents. Will you use a single agent or appoint co-agents?
Who will be your successor agent(s) if someone is unable or unwilling to
fulfill their duties? These are the questions you need to answer before
you are ready. Your agent(s) should be organized, good with numbers and
possess great common sense.
2. Access Medical Records:
Will you allow your agents to have access to your medical records? They
may need this information to keep track of, or to dispute medical
bills. But if you want or do not want them to have access to this
information, you will need to specify inside your power of attorney.
3. General or Specific Powers:
Will your power of attorney provide your agent with broad general
powers or very specific powers? You can decide on either, but the more
specific you get, the more limited the powers your agent will be
allowed. Most people will choose to provide a general power that will
include handling most financial, business and personal matters.
4. Beneficiary Changes:
You can empower your agents with the ability to change your
beneficiaries if you would like, but this can be a risky proposition. In
most instances, you will not allow for this provision. You can also
provide for the power to refuse potential inheritances. I think this can
be helpful in situations where, if someone passes and is leaving you an
inheritance, but you refuse it (or are deceased), it would go directly
to your children instead.
5. Effective Dates:
will your power of attorney take effect? When will it terminate? You
can have it take effect immediately upon execution, you can have it take
effect upon the certification of some medical condition or you can
specify a certain time period. You might use this if you were going to
be out of the country for 3 months or in a rehabilitation program for
certain length of time. All powers of attorney terminate immediately
upon the death of the individual, but you can set other dates or events
as previously outlined.
6. Hire Professionals:
Will your agent have the power to hire professionals such as
accountants, financial advisers, lawyers, etc? If you want them to be
able to handle these on your behalf, you have to specifically allow them
by including this power within your document. If not, you may want to
specify who you are already working with and require their services if
7. Receive Compensation:
Will your agent
be allowed to receive reasonable compensation for time and efforts spent
acting as your agent? Will they also be allowed to receive
reimbursement for any expenses that they incur while acting on your
behalf? In most cases you should allow both of these. Taking care of
someone's affairs can be time-consuming and there should be reasonable
remuneration for these services. While you can specify either way, your
agents may be unwilling to participate without it and this could cause
bigger problem down the road.
power of attorney drafted is a fairly simple and inexpensive process.
You can hire an attorney, use online legal services or purchase a legal
software package to assist you with the preparation. It is very
important to follow the execution and filing recommendations for your
state and county. Having proper witnesses and notarization of all
signatures is a great safeguard for any legal documents, so make sure to
get them done right.
To discover additional estate, financial and income tax strategies, check out my blog or download your FREE Wealth Expansion Kit by clicking here.
The first step to creating wealth is knowing where you are and then
charting a path that will enhance your financial strengths and correct
your weaknesses. Keith Maderer is a financial expert and has been a investment and
tax adviser in the Western New York area for over 30 years. He is the
owner of SENIOR Financial and Tax Associates and the founder of the
Maderer Foundation, a private scholarship program. Keith is also the author of "How To Get Your College Education For Less". Available on Amazon.com - ISBN No: 978-1-4538-2053-7.
You can get your FREE Wealth Expansion Kit, or check out his blog by visiting http://www.sftaweb.com