An individual (the “principal”) can execute a power of attorney authorizing another person (known as an “agent”) to act on his or her behalf to handle finances, sign contracts on their behalf, buy and sell investments and other decisions of this nature.
Powers of attorney are frequently drafted as people age and find these matters burdensome, even though they may be mentally and physically able to address them on their own.
Fed Week’s recent article entitled “Considerations for Providing a Power of Attorney” suggests that you be sure to execute a “durable” power of attorney.
Some seniors may wonder about giving such authority in a power of attorney to someone else while they’re still competent.
In many states, a senior can sign a “springing durable power of attorney,” which takes effect only under certain specified circumstances.
A common example is when a springing power is to take effect only after two doctors, including a senior’s personal physician, have determined that the principal has become incapacitated.
Regardless of the type of power a person selects, it should be reviewed and updated every few years with the help of an experienced estate planning or elder law attorney.
The reason is that a person’s situation may change. This may result in the need to name another agent. Some financial institutions also won’t accept old powers of attorney.
Ask your bank, broker and mutual fund company about whether they’ll accept your power, or if they’ll insist that their own form be used—which is a common practice in the financial world.
Reference: Fed Week (Nov. 1, 2021) “Considerations for Providing a Power of Attorney”