Powers of Attorney. Martin Shenkman
a one-page form—purchased at a local stationery store, or from an online Internet provider, this can be a costly mistake. The power of attorney should be a far more deliberate document designed to address your personal needs now and in the future. An overly simplistic power of attorney may prove inadequate and result in requiring more complex, and far more costly, legal proceedings to accomplish your goals. Thus, a more complex and lengthy document prepared by an attorney to deal with specific issues you might face, such as dealing with business transactions, real estate exchanges, a professional practice, gifts, and other issues, may prove simpler in the long run.
Tip: When you finish reading this brief book, you will understand why you’ll be better served with a more deliberate, planned, and tailored power of attorney.
This book will help you understand the terminology of a power of attorney, some of the key decisions you might need to make to guide your lawyer in properly preparing a power of attorney for you, and several of the many options that should be considered. We’ll explain how your power of attorney relates to your other estate planning and documents. Finally, you will get some practical suggestions on how to address your financial and legal affairs to maximize the benefits of your power of attorney. Merely securing an adequate (or even good) legal document alone will not suffice. After you read this book, you’ll understand why, and you’ll know what to do to prepare the power of attorney you need.
The Bigger Picture
Think you are too young or too healthy to need a power of attorney? Think again! According to a recent study, only 24 percent of workers have a backup plan for retirement income if forced into retirement sooner than expected. For most people, more planning is critical. A power of attorney is merely one component of what should be a comprehensive plan to address the challenges of illness, disability, and aging. For example, if you don’t have an adequate disability income replacement policy, you might have a great power of attorney document, but if your agent does not have adequate financial resources to work with, they will never really be able to help you and your loved ones in the manner you had hoped for. Comprehensive planning, not just a document, is always best.
CHAPTER TWO
The Process of Obtaining a Power of Attorney
Let’s get started by reviewing the process you should follow to obtain your power of attorney. Read this brief book to better understand the importance of a power, how it can be used, and some of the tailoring you might need to do to address your situation. Make notes as to specific issues or concerns on special items that should be addressed in your power of attorney. You are ready to get started:
•Gather the information necessary for the preparation of a power of attorney. As this book discusses, you need to take a broader view of your overall planning so that you can ascertain not only what provisions to include in your power of attorney, but what other planning steps are necessary to fully accomplish your goals. Appendix A includes a checklist you can complete to prepare some of this information. But bear in mind that any checklist or form is only a starting point. The key, and perhaps what might be referred to as the “art” of planning, is tailoring the standard steps to meet your personal needs.
•The laws governing powers of attorney vary considerably from one state to another. So hire an attorney in your state to prepare your power of attorney document. Although the discussions in this book will give you many ideas as to how to personalize forms you might find elsewhere, optimally tailoring such a powerful and complex document to your needs and specifications is unlikely to be done well without the help of an attorney. Using an inexpensive Internet form is enticing to many people but there are problems in trying to design your own power of attorney just as there are problems in writing your own will. The next chapter critiques that process. Read this chapter first so you understand more of what is involved in properly planning for a power of attorney so you can fully evaluate what you should, and should not, do on your own.
•Review the draft power of attorney with your lawyer and be sure that it is tailored to address your personal circumstances and goals. This might include your financial status, health (see Appendix B), religious considerations (see Appendix C), or other matters you or your attorney identify. Ask your attorney to provide you an overview so you understand the document in broad strokes. A 15 to 20 minute run-through will make your later more detailed reading of the document much easier and less frustrating. In addition to the general overview, have your attorney identify the key provisions tailored to your specific situation.
•Sign the power of attorney with appropriate formalities (e.g., witnesses and notary).
•Secure the original in a fireproof and safe location. A bank safe deposit box is not likely to be optimal because the days and hours of access may be limited. More important, your agent will need the power of attorney you put in the safe deposit box to prove to your bank that he or she has the right to access the box.
•Determine how many originals should be signed. Many lawyers recommend that multiple copies be signed. Sometimes a third party like a bank or real estate broker will request or insist on an original. Your agent might appreciate having an original. This and other practical aspects of working with powers of attorney are discussed later.
•Save an electronic copy of the original. Scanning is simple and scanners can be purchased for modest prices online or at any office supply store. If you don’t usually scan legal documents, now is a good time to start. It is a great way to secure documents and increase the likelihood of a copy being readily identified in an emergency. The printer you may have in your home now may be a 3-in-1 printer/copier/scanner that might suffice. While you might photograph the document with a smart phone, and apps are available to make pictures of documents better, the quality may not be what you need in an emergency. Also, a PDF resulting from a scan is likely to be more useable than an alternate format.
•Ask your attorney whether you should record (file) a power of attorney with the recording office (county clerk) where you reside. This is not normally done but in some instances might be advisable.
What Do You Tell Your Agent?
Confer with the person you will name agent so that he (or she) understands what will be expected of him and confirm his willingness to serve. Many people choose not to inform the person they’ve named agent. While this might prove advantageous if years from now you change your power and name someone else, it will make it extremely difficult for that person to step in and help if any of the risks that are motivating you to prepare a power of attorney in the first place actually occur. If you are uncomfortable informing the person you named agent, it’s a good sign you’ve named the wrong person.
Caution: If you don’t speak with the person named agent, he will not know to step up to the plate if you are ill or injured. Also, what if he doesn’t want to serve? The best time to find that out is while you planning the document, not in the midst of an emergency.
Should You Give Your Agent a Copy or Original of Your Power of attorney?
Whether you should provide your agent with a copy (or perhaps original) of the signed power is not a simple decision. Without a copy of the document, the agent is less likely to remember the appointment or know where to begin. However, if you give the agent a copy of the document, or an original, how do you comfortably retrieve that document if you decide to name a new agent some time in the future?
Example: “Sister, I need my power of attorney back. I’ve decided after seeing the abysmal way you have handled your finances that I have to name another person to be in charge of my money if something happens.” Thanksgiving dinner won’t ever be the same after that conversation.
Comment: You could sign a new power of attorney that voids all prior powers of attorney. Alternatively, you might sign a specific document just revoking the grant of rights to your sister. While all this might legally suffice, you might still find it uncomfortable to leave an original with your sister. It might also be rather awkward should your sister ask questions about the power or attempt to use it only to find it