Compounding this issue, those who actually do have a Power of Attorney are often unaware that the document they possess is relatively useless if they were to ever become incapacitated and require Medicaid assistance and/or the services of a skilled nursing facility. I don’t want this to happen to you or your loved ones – that’s why I am breaking down what a Power of Attorney strives to accomplish and why you actually need one.
I’ll go a step further, too, to include information about modifications and provisions that should always be present in your Power of Attorney to ensure its effectiveness in even the very worst of situations.
Power of Attorney: The Definition You Need to Know
Perhaps the best way to explain the Power of Attorney is to envision that the person you appoint as your agent miraculously wears a mask that looks exactly like you whenever they transact business as your agent.
Why You Really Need a Power of Attorney
Now that we’ve established what a Power of Attorney is, it’s time to look at why would someone would ever need a document that allows someone else to tinker with their financials.
The answer is quite simple: we never know when tragedy will strike.
Let’s consider an example…
Joe and Doreen Smith are married. Although the couple has an older Last Will and Testament, they never bothered to execute a Power of Attorney. Doreen is involved in a tragic car accident, and although she survives, the injuries she has sustained have placed her into a coma. To make matters worse, even if Doreen recovers from her comatose state, she will require skilled care for the rest of her life. As if balancing this situation wasn’t hard enough on Joe, he discovers he has no access to Doreen’s checking and savings accounts as these accounts were solely in her name. Despite Joe’s pleas to the bank, they refuse to let Mr. Smith access his wife’s accounts.
Although this is the most basic of examples, the aforementioned situation clearly dictates why a Power of Attorney is important. I’ll break it down a bit further.
If Mr. Smith had executed a Power of Attorney:
He would have had readily available access to his wife’s finances so that he could pay any of her bills and/or expenses.
Furthermore, because Doreen is now mentally incapacitated, she is no longer able to sign a Power of Attorney. As a result, Joe will now have to petition the Court in order to be appointed as his wife’s Article 81 Guardian.
The Article 81 Guardianship process will require the assistance of an attorney, is extremely lengthy, and perhaps most importantly, can be extremely costly. Given that an Article 81 Guardianship proceeding can cost thousands to tens of thousands of dollars in legal fees and disbursements; the low cost of a few hundred dollars for a properly drafted Power of Attorney is invaluable.
Later this month, I’ll dig even further into the Power of Attorney to help you make the best decisions for your family. In the meantime, please contact us with any questions.
Related Topics: Estate Planning