Powers of Attorney. Martin Shenkman
is essential to anyone managing his or her own finances. There are simply too many account names, passwords, usernames, and more to keep track of. If you’re finding this a challenge, imagine the difficulties your agent will face sorting out your confidential data without your assistance!
Some people take a stab at organizing account and other information on paper. But where is that paper located? Will an agent find it? How will you update it? Perhaps a better option is to use one of the inexpensive apps available for a smart phone that can securely maintain, encrypt, and backup your data. Your agent could be given the website for the app, your username and password and can then access the most current information to act in the event of an emergency.
Example: You’ve been buying an increasing portion of consumables online and conducting your banking online. As you get older, the amount of online activity may well increase because it is so much easier, more convenient, and safer than physically going shopping or to a bank. Even if your agent has a comprehensive power of attorney authorizing him or her to act legally on your behalf, the entire world of your purchases and banking will be inaccessible without your usernames and passwords.
CHAPTER THREE
Should You Get a Power of Attorney Online?
So why spend money on a conventional lawyer if you can get your power of attorney for free or for a modest price online? You might think that any lawyer would bash every Internet power of attorney form and insist hiring a lawyer will assure you of a better result. But we’re not guaranteeing that if you hire an attorney you’ll assuredly get a better result than what you might find using an online form. There are positives and negatives to the results you might obtain with an Internet form or an attorney. The real answer is that you have to be proactive; approach your planning in a comprehensive and deliberate manner, whatever options you decide on. Here are a few things to keep in mind as you decide on a course of action that fits your needs.
Knowledge Is the Key
The more you understand about powers of attorney the better result you will achieve. Be very cautious when reading information on the Internet. If you search for “powers of attorney,” the quality of information you pull up varies dramatically. Even some well-known websites have considerable misinformation and even errors in their discussions of powers. Other sites have pretty good explanations. How can you decide which site is good? Many of the consumer legal websites, even with good information, often limit discussions to very short articles and snipets of information. The time you have available to sift through the information is most likely limited, but that doesn’t mean that the issues in planning, preparing for, creating, and using a power of attorney can adequately be explained to you in a 100 word dialogue box of explanation on a legal website. If you must prepare a power on your own because of financial constraints, then you must invest some energy (like reading this book carefully for starters) before doing so. The biggest fault with online powers of attorney is that they don’t require you to acquire a basic understanding of what the decisions you have to make are. They don’t have lists of cautions of when their documents may not serve your needs. Without this groundwork, you cannot possibly make the right decisions.
Tip: The Uniform Power of Attorney Act may provide some useful guidance: http://www.uniformlaws.org/Act.aspx?title=Power+of+Attorney.
If you understand in broad terms the real uses of powers of attorney, how they fit into your overall planning, what ancillary steps to take, and how to identify some of the particular issues that need to be tailored to your goals, you will enable yourself to choose what approach will best serve your needs.
Using an Experienced Estate Planning Attorney Is Key
Unless the attorney you hire has considerable experience in addressing powers of attorney and related planning (that phrase “and related planning” is quite important), you may not get the document you specifically need. Hire a lawyer who either specializes in estate planning, or who devotes a considerable portion of his or her work time to estate planning matters.
How do you know your lawyer is not using the same Internet site you might have used to prepare forms? When we prepared a power of attorney on a well-known legal website (see discussion that follows), we received a phone call offering a special legal membership to use their forms for a discounted price. So if you hire a lawyer who is not really a specialist, he or she might be using the same website and charging you far more! So if you are going to hire a lawyer, hire a good one. Consider the following:
•Hire a lawyer licensed in your state. State laws differ, so hiring one in another state, unless that lawyer is admitted to practice in your state or works with a lawyer in your state (called co-counseling), you may not be properly served.
•Be certain that the attorney is an estate planning specialist. Inquire what percentage of the lawyer’s time is devoted to estate planning. It should be more that 50 percent—considerably more.
•Ask your CPA, broker, banker/wealth manager, real estate lawyer, and other knowledgeable professionals for recommendations. A recommendation from someone who works with estate planners on a regular basis is a good way to get information.
Compare Total Costs, Not Just Upfront Costs
Hiring a lawyer will be more costly up front. The real issue to evaluate is not what it costs for a “form” but what the entire process of obtaining a power of attorney, and of someone using it if it becomes necessary to help you, will cost. The incredibly poor quality of some Internet forms is such that the costs in terms of professional fees to help an agent interpret a cryptic or inappropriate power of attorney could far exceed the cost of your having retained a lawyer and had the document prepared properly in the first place. As is true with so many things in life: “you get what you pay for.” But with a dangerously defective power of attorney, you may get a lot less than you pay for—it may cost you exponentially more to unravel a poor document.
Example: You decide to use an inexpensive Internet form. The form asks you to list powers you will give your agent. When you see the broad list of things an agent can be authorized to do, you get uncomfortable (which is a pretty natural and logical reaction). So you limit what you permit an agent to do. Years later you are in an accident and your agent needs to act for you. But when your agent contacts your broker to sell certain assets of yours to pay for your care she is informed that your power of attorney is too narrow to permit this. As a result, your agent has to hire an attorney to formally be appointed as a guardian in a costly court proceeding. How much money did you save on using the Internet form?
Free Can Be Better Than Cheap
Many consumers cannot afford the costs of hiring an estate planning specialist lawyer. Even if you can afford this recommended option, your children or grandchildren may not be able to. If you are in this category, instead of paying $50 on a legal website for a power of attorney, first investigate what might be available to you free. And bear in mind the old adage is wrong. You don’t always get what you pay for. Free may be better than paying.
Many states create what are referred to as “statutory powers of attorney.” These are standard documents intended to work in that particular state. These forms may be accepted more readily in your state than a more comprehensive Internet form. Why pay for something less effective? Some of the state statutory forms are designed for consumers who may not be able to afford an attorney. Try searching the name of your state and the phrase “statutory power of attorney.” For example, for New York this search will give you the following link: https://www.bethpagefcu.com/~/media/Files/bethpage/forms/Power_of_attorney/New_York_State_POA_Gift_Rider.ashx.
Tip: Regardless of what state you live in, if you are going to use an attorney or Internet legal website, compare the power of attorney you prepare to the New York form. The New York form is extremely comprehensive (most lawyers would say overly comprehensive). This can provide a touchstone to compare what you are getting from a lawyer