At Boyer Law Group, we have assisted in preparing thousands of estate planning documents, including powers of attorney for finances. The power of attorney for finances is an essential tool in planning ahead and helping make sure your agent can manage your finances when you can no longer do so yourself. Let’s discuss seven common mistakes to avoid with powers of attorney.
- Choosing the Wrong Person as Your Agent. Your chosen agent, the person granted power in the document, should be someone you trust. Some people think they need to choose the person who lives closest. But you should choose the best person for the role.
- Not Naming Successors. What if your primary agent dies or cannot perform the duties? It is a good idea to name backups or successors in all your estate planning documents.
- Not Planning Properly for Managing Real Estate. Real estate management is a common power given in the power of attorney for finances. In many states, for your agent to be able to handle real estate matters, the power of attorney for finances must be recorded in the proper assessor’s office.
- Not Planning Properly for Medicaid Planning. If you need long-term care in the future, you might end up needing an irrevocable trust and lack the capacity to create one. A properly drafted power of attorney might include that provision, and yet this authority could be subject to abuse so you want to consider putting limits on the agent’s authority as well.
- Ignoring Updates and Reviews. Life changes and so should your estate planning documents which includes your power of attorney for finances. Marriages, divorces, births, deaths, or changes in financial status require revisions to your estate plan. Regular reviews ensure it remains consistent with your wishes.
- Not Notifying Acting Agents of Change. If you revoke a prior document, any agents acting under that power must be notified in writing right away. If you have given a copy of the prior power of attorney to your bank, then send them the new document and ask them to replace the old one.
- Not Properly Preparing Your Agent. Serving as an agent is a lot of work. It is a good idea to adequately prepare your agent with a good roadmap of your financial picture. Ms. Boyer’s upcoming book does exactly that: prompts you on all the details to write down to make things easier for your agent and for your family.
If you wait until you are in crisis, you may still be able to get your plan in place, but it could be too late. Don’t procrastinate! The biggest mistake is not having your power of attorney in place. Without it, your loved ones may need to begin court proceedings to have legal authority to assist you. Avoid these seven mistakes and take charge of your financial future.