Last week, I attended a continuing education seminar titled Elder Law Boot Camp for Financial Advisors that was hosted by an estate planning attorney. I know. Sounds fun, right? But it was actually much better than I thought it would be and it had some great takeaways.
Usually when you go to these types of events, you expect to be bored out of your mind and hear the same information that you’ve heard 1,000 times before from some monotoned 800-year-old man. But, the speaker at this event was engaging, she provided a great review of the information that I’ve learned before, and she spoke about new and innovative strategies that I’ve never heard about before. One thing that she said that caught my attention was , “…this is the one document I truly believe every person over the age of 18 should have.” She was talking about a Power of Attorney.
It struck me when she said this because it’s something that I believe, I’ve preached it before, and it’s something that I’d bet most people don’t have in place, don’t want to think about, and maybe have never even heard of.
Read that again and seriously consider it. The one document that an estate planning and elder law attorney believes that every person over the age of 18 should have in place is a power of attorney. As a financial planner, I have a hard time thinking of one single recommendation that I could make to such a large group of people.
Power of Attorney
A Power of Attorney (POA) is a legal document which declares who your attorney-in-fact is. An attorney-in-fact is the person who you authorize to take care of your affairs for you, usually in case you become incapacitated and can’t act for yourself. For example, if something happened to you and you weren’t able to make decisions for yourself, your attorney-in-fact would have the authority to take care of things for you like making sure your bills get paid, managing your financial affairs, and handling other business-type decisions.
Your Choice
You get to choose who your attorney-in-fact is (most people choose a close family member that they trust) and you can even limit or expand the rights that they have when you have an attorney draft the document, although your attorney likely already uses the language they best see fit. Without this document in place, the decision is up to the state to make. While you may think you know who the state would choose to act on your behalf, and you might be fine with it, you could be surprised. Sometimes, people don’t want who the state sees as next in line to take over their affairs to do so and that’s when having your own directive in place can become especially powerful.
Choose Who You Trust
Although when we think of a power of attorney document we probably usually think of it coming into play when someone is in a coma and not able to communicate or otherwise incapacitated, many attorneys prefer to write powers of attorney that are effective at signing, rather than becoming effective dependent on an event like this. Often, their arguments for this are that if you can’t trust the person while you’re well, you shouldn’t trust them when you’re not able to act for yourself. Additionally, having the powers effective at signing can save a lot of time, effort, and stress later on when they need to be used under the circumstance that they are written to become effective at incapacity, which usually must be validated by multiple doctors and approved by a court.
Responsible & Thoughtful
We never know when something could happen to us. If a power of attorney is the one document that an estate planning attorney thinks everyone over the age of 18 should have in place, then I’d say it’s pretty important. It’s not just for rich people or old people or people with disabilities – it can be extremely valuable to everyone. Not only is having a POA in place responsible, but it also can save your loved ones pain and heartache in the long run.
