Understanding Powers of Attorney

 Posted on October 12, 2017 in Estate Planning

Estate planning can be a difficult task for many individuals. Rare is the person who is excited about confronting his or her own mortality. The reality is that none of us will live forever, and estate planning affords us the opportunity to provide for our family members and loved ones well beyond our lifetime. Some elements of estate planning, however, are intended to take effect, if necessary, while you are still living so that your affairs can be properly managed, no matter what happens to you. Powers of Attorney are among the most important estate planning instruments, but they are often overlooked by those who are unfamiliar with their application.

Two Types

There are two different kinds of Powers of Attorney (POA): Power of Attorney for Property and Power of Attorney for Health Care. The two categories refer to the subject matter covered by the document, but both types give a trusted friend or family member the authority to make decisions for you in the event you are not able to make them for yourself. As their names imply, a POA for Property gives your chosen individual or entity—known as an agent—the power to make decisions regarding your finances, assets, and debts while a POA for Health Care appoints an agent to make medical and health-related decisions. By using POAs properly, you can help protect your family from uncertainty and unnecessary costs associated with guardianship proceedings.

A Health Care POA will usually be recognized by medical professionals and health care facilities so that your agent can act on your behalf if you become incapacitated. Banks and other financial institutions, however, are often much more skeptical of POAs for Property. Some reject the more general POA because the institutions require their own POA forms, while others have concerns that the POA documents have become “stale.” By their very nature, a POA would not be presented unless the creator was already incapacitated to the point that the POA’s provisions were in effect. As a result, signing a new, bank-approved document, would be virtually impossible. A previously appointed agent would have little option but to file for guardianship over the incapacitated person to complete the intended transactions.

Preventing Problems

Fortunately, there are few things you can do to help eliminate most potential issues. First, you should make sure that your POA documents are up to date and include the most current statutory provisions. Next, consider signing new Powers of Attorney at least every five years or so to prevent claims that the documents are outdated.

It is also a good idea to limit your appointments to one agent for each POA at a time. Having a separate agent for health care and property is understandable, as each may have certain knowledge and strengths. Asking two co-agents to share responsibility for either your property or health care, however, can create unnecessary confusion.

Finally, you want to be sure that your POA has enough authority to carry out his or her responsibilities. He or she should be able to amend your other estate planning instruments—with good reason—and change beneficiaries if needed. Naming agent but failing to equip him or her with the tools to do the job is a waste of time, money, and effort.

Call Us for Help

If you have questions about Powers of Attorney in Illinois, contact an experienced Lombard estate planning attorney to get the answers. Call 630-426-0196 for a confidential consultation at A. Traub & Associates today.

Sources:

https://www.nytimes.com/2016/05/10/health/finding-out-your-power-of-attorney-is-powerless.html

https://www.caring.com/questions/can-banks-refuse-power-of-attorney