Not all Powers of Attorney are created equal. A client’s circumstances should dictate the breadth and extent of powers granted to an Agent under a Financial Power of Attorney, often called a General or Durable Power of Attorney. Below, we have highlighted some of the critical provisions that you should thoroughly understand.
- Gifting Power: Without a gifting power, an Agent’s ability to protect an incapacitated client’s assets with Medicaid or VA Planning may be severely limited. On the other hand, many clients may be hesitant to grant an Agent the unilateral authority to give away their property. Whether or not to include a gifting power is a question that should be given careful consideration after seeking the advice of a knowledgeable elder law attorney.
- Power to Create Trusts: Trusts are a valuable tool in an elder law attorney’s toolbox. Accordingly, it is important for clients to consider granting their Agent the power to create Trusts. A knowledgeable elder law attorney can help clients decide whether to authorize their Agent to create or modify Revocable or Irrevocable Trusts.
- Durability: Although it seems reasonable to assume that a power of attorney should enable an Agent to act while a principal is incapacitated, it is important to explicitly state that such power is durable through a principal’s subsequent incapacity. Failure to include such a provision may create obstacles when dealing with financial institutions or even render the document invalid, depending on state law, if the principal becomes incapacitated after signing.
- Immediate or Springing: A power of attorney may grant an Agent the immediate authority to act or it may be “springing,” meaning that the Agent may only act in the event that the client becomes incapacitated. In many cases, the document may be tailored to grant immediate authority to the principal’s spouse while authorizing the successor Agents to act only in the event of incapacity.
- Updates: Many financial institutions have their own internal rules about whether a Power of Attorney should be considered in full force and effect. Although not required by law, we recommend that clients update their Powers of Attorney at least once every five (5) years to avoid the inconvenience and expense of convincing (or forcing) a financial institution to honor an aged document.