As your friendly, neighborhood estate planning and elder law professionals, we always recommend having a carefully crafted and comprehensive plan in place for the day you pass away or become incapacitated. It is simply the right thing to do — for you and your precious family. The word “comprehensive” is of particular importance, though, because estate planning should always go beyond a standard will to also include trusts, a power of attorney, burial directives, and more.
One document alone does not always account for every life scenario or your specific and unique needs. It takes all of them — each serving a specific purpose to ensure that all of your bases are covered.
For the today’s blog post, we will use a power of attorney as an example.
While a very powerful tool, the POA has its share of pros and cons that must be carefully weighed.
Power of Attorney — Pros
A power of attorney has long been known as a go-to option when choosing another person (called the attorney-in-fact or agent) to handle financial affairs on your behalf should you become incapacitated and can no longer make critical business, personal, financial, or medical decisions for yourself. People like it because of these pros:
- Ability to choose — You can choose who will make decisions for you.
- Flexibility — The power you allow can be narrow (example: pay bills and sign checks) or broad, effective immediately or at some point in the future, and temporary or permanent.
- Not just for incapacitation — Many people who travel overseas extensively or are in the military rely on the POA so that someone they trust can handle important affairs on their behalf.
- Convenience — You do not have to be present for your attorney-in-fact to handle certain affairs on your behalf.
- Improved planning — A POA can also keep your family from dealing with costly and emotional court proceedings.
What most people do not realize, however, is that a power of attorney might not be sufficient enough by itself to meet your specific and unique needs in the event of temporary or permanent incapacity.
Power of Attorney — Cons
- Not everyone accepts them — Texas law does not require anyone to accept a financial power of attorney except in some really narrow circumstances. For instance, if a bank is nervous about whether the person was competent when the POA was signed, the bank can refuse to accept the power of attorney without an affidavit from an attorney that the person was competent when the document was signed. Many companies that accept POAs may also require that for someone to act under a POA, the power to do what they are trying to do must be specifically listed.
- Do-it-yourself versions — Many power of attorney templates can be found online. On paper, they make it very easy to simply fill in the blanks. The problem is that it is almost impossible to think of every important thing that would have to be handled during a period of incapacity. Thus, Do-it-yourself forms will likely not be specific enough to cover all your bases.
- Revocation — Another potential limitation is that it does not take away the incapacitated person’s ability to revoke the POA or to make financial decisions. There have been many situations where the incapacitated person was falling for scams. When the children tried to use the POA, the incapacitated person revoked it. This can cause quite a mess.
The main takeaway is that a power of attorney is likely insufficient to cover all of your bases in the event you are incapacitated. You need a more robust plan, including the POA, to protect everything you own and everyone you love. Consult with a qualified estate planner about your situation.
Call Leigh Hilton PLLC today!!
Flexibility in estate planning is important. Accidents or illnesses can take away our ability to act responsibly and handle personal or business decisions. And this can happen to anyone at any age. Please call Leigh Hilton PLLC so that we can help ensure your family will be taken care of in the best way possible.
Leigh Hilton PLLC wants to be your first call every time for any estate planning need.
We look forward to serving you.