Thursday, February 6, 2014


A power of attorney is a document that gives the agent you appoint the power to handle your financial affairs.  The agent has a fiduciary duty to use your assets for your benefit and they only have the powers you give them in the document.  There are “limited” power of attorney documents that grant only certain powers (like access to one particular bank account for one purpose or it could be temporally limited:  you might decide to appoint an agent a power of attorney over all financial affairs during a scheduled hospital stay).  There are also “general” power of attorney documents that are meant to allow agents to handle most or all of your financial matters.  The powers and limitations are listed in the document.

Often when we think about appointing an agent for power of attorney we are worried about something happening suddenly to cause incapacity.  You may think, “I need to set up a power of attorney so my loved one can access my bank account if I’m in a car accident.”  That is true, but when it comes to assisting the elderly the reality is often not so clear cut.  Many times incapacity edges slowly in like a rising tide, with individual days ebbing and flowing like waves, and the line where capacity and incapacity meet is far from clear.

If you have someone you trust implicitly it is often a good idea to make them your agent under a power of attorney that is both effective immediately and “durable,”  which means that it will remain in effect after incapacity.  Many power of attorney documents (go check yours!) require one or two doctors statements that the principal is incapacitated before the power of attorney goes into effect.  If incapacity is unclear, or you only need assistance on “bad” days, getting the doctor’s signatures could be expensive and time consuming for your agent.  Some doctors may refuse because they are worried about their own liability if they make the wrong call.  If you trust your intended agent, making the power of attorney immediate and durable will save them the hassle of dragging you around to doctors appointments just so they can take over paying the bills.  If you are concerned that your intended agent is a little to eager to take over your affairs you may want to appoint a third person you trust to designate you as sufficiently incapacitated for your agent to take over.  Remember, though, to always have successors designated for any role in an estate planning document because life has lots of unexpected twists and who knows who will be around when that document goes into effect.

Although there is a free statutory power of attorney for Californians, it is not useful for complicated matters like Medi-Cal planning or extensive trust management.  If long term nursing care is a concern you should speak to an elder lawyer.

In my opinion, everyone should work with an attorney for their estate planning needs.  Even if you used a form you found online you should at least try to have an attorney review it (but be aware that many attorneys will only work with their own forms because they don’t want to be liable for yours).  I have a whole post on whether or not you should use online forms.

Even after you have a power of attorney document set up you may want to ask your bank if they have their own form.  Often banks prefer that you use their form and, if you do, things may go more smoothly for your agent.  For example, recently Bank of America did not allow an agent using a power of attorney to access online banking.  Also, many banks won’t allow an agent to add a signer to the account.

1 comment:

  1. Thanks for taking the time to share this wonderful post about needing a power of attorney for your situation. There was plenty of helpful tips you provided throughout your article. Have a wonderful rest of your day and keep up the posts.
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