Financial Decision Making
After you have completed your Health Care Decision-making documents, the next step in your Aging Preparedness Kit is to prepare a Power of Attorney for financial matters. A Power of Attorney is a written document in which you, as the “principal”, appoint another individual as an “agent” to act for you under the terms and conditions set forth in the document. I consider this to be the single most important document in your Kit, and yet it often receives little attention.
Why is it so important? Because if you do not have a comprehensive power of attorney and you become incapacitated, you cannot sign a power of attorney and there will be no one with the legal authority to handle your financial affairs. In the absence of a valid Power of Attorney document, even your spouse will have no authority to act for you.
Without a Power of Attorney, a court appointed guardian may be necessary. The guardianship process is not only expensive, but it can be intrusive, inflexible and even embarrassing. Under the guardianship law, the guardian may not be able to address all of the issues that could have been effectively managed by the agent under a Power of Attorney.
A properly drafted Power of Attorney can accomplish many things. It can ensure that your desired decisions will be made by the people you want to make those decisions. It can increase the likelihood that your values and goals will be respected. It can help to prevent financial exploitation by unscrupulous persons.
A comprehensive Power of Attorney is vital to meeting a family’s goal of preserving assets in the case of devastating chronic health care needs such as a nursing home placement. Nursing home care now costs in excess of $8000 per month, or over $96,000 per year. In order to be able to plan appropriately for such an event, the Power of Attorney document must be drafted specifically to provide for asset protection planning. If appropriate powers are not included in the document, your agent will not be able to plan for such events and your financial security could be jeopardized.
Once the Power of Attorney is in place, you, the “principal” still retain the power to act for yourself. So long as you remain competent, you also retain the power to revoke or to change the document. So it isn’t written in stone. You can change the agents or the powers as things change in your life.
The selection of your agent is an important part of this process. You want people who will be responsible, honest, and fair. You want someone who will communicate with you and others, investigate the options, consider the choices in light of your best interests, and exercise common sense in making decisions.
Yes, there are dangers as well with a Power of Attorney. It can be used by unscrupulous people as a tool for elder abuse and financial exploitation. That is why extreme care must be given to selecting the appropriate agents and drafting the document to meet each person’s unique situation.
By Leslie Wizelman, CELA | Wyalusing, PA | http://www.lesliewizelman.com/
This article is for informational purposes only and is not intended to be advertising, solicitation, or legal advice. This article may not reflect the most recent legal changes. Individual circumstances vary, and laws differ from state to state. If you have a question about your specific situation, we recommend that you find a certified elder law attorney in your area.