April 27th, 2010
A Durable Power of Attorney is a vital document for anyone, but it is especially important for individuals engaging in estate and long-term care planning. Most people mistakenly assume that close family members (such as spouses or children) will have the authority to manage an individual’s assets when he or she is no longer able to do so. Without a Power of Attorney, this is simply not the case.
The Power of Attorney gives an agent (also known as attorney-in-fact) the authority to make financial decisions and manage property on behalf of a principal. You can designate more than one agent, and you can determine whether or not you would prefer them to act together, or have to ability to act separately. You can also designate a successor agent, so that there is someone who can fill in when your agent is unable or unwilling to act.
A Power of Attorney can be limited and only grant the agent authority over specific acts, or it can be a broad grant of a wide range of powers. A Power of Attorney that is durable allows the document to continue in full force once the principal loses mental capacity. It is essential that you execute a Durable Power of Attorney, so that your attorney-in-fact will not be left powerless if you have lost mental capacity.
Your attorney-in-fact can do many things, including pay your bills, manage your investments, sign financial documents on your behalf, and even transfer your money, if given the authority to do so. If you grant broad powers, your agent will be able to do anything that you can do with regards to your assets or property.
Because a Power of Attorney can give an individual complete control over all of your property, it is crucial that you choose a person who is right for the job. When choosing your agent, make sure he or she is a trusted individual who is responsible, dependable, and ethical. He or she does not have to be a lawyer or a financial expert, but should be someone who is competent to handle financial matters. It is important that you communicate to your agent how you wish your assets to be managed should you be unable to do so yourself. Also, make sure you fully disclose all of the property you own, and which financial institutions you hold accounts with, so that your agent has full knowledge of the extent of your assets. It is also imperative that the attorney-in-fact knows where the original signed power of attorney is being kept, since financial institutions often require an original document.
And remember: if you find that you are unhappy with the way your attorney-in-fact is handling your affairs, or change your mind for any reason, you can always revoke the Power of Attorney.
August 4th, 2009
New York State’s new rules governing the use of the Durable Power of Attorney document are designed to make sure that, when granting powers to an agent, you fully understand what you are doing, particularly when the agent is being given the power to make “major gifts” of your money or property, to himself or others. Also, the agent is now required to acknowledge his responsibility to act in your best interests, and to sign the document himself.
Here are a few of the specific provisions in the new law regarding the Durable Power of Attorney:
- Your property must be kept “separate and distinct” from any property individually or jointly owned by your appointed agent.
- Your agent may not transfer any property to himself or herself without your specific authorization.
- Agents are required to avoid conflicts of interest.
- Your agent must keep records of payments, receipts and other transactions, and produce them for inspection at your request, or at the direction of another party you choose to monitor his or her conduct. Certain government agencies are also entitled to inspect records.
- Records need to be made available for inspection with 15 days of a valid request.
- If your agent does not comply with authorized requests for inspection of records and activities, special proceedings are available under the new law to force compliance.
- Agents can be legally liable for failure to act according to a “prudent” person standard in relation to your finances and assets.
To learn more about why a Durable Power of Attorney is so important in regard to Elder Law strategies, Medicaid eligibility and estate planning, see Strategies # 17 in Lamson and Cutner’s Special Report, 25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs here.
July 29th, 2009
A Durable Power of Attorney is an essential and critical document for Elder Law planning. A common mistake made by many elderly individuals is to assume that a standard Power of Attorney they obtained in a stationary store or downloaded from the Internet will suffice for Medicaid eligibility planning purposes. These documents are not powerful enough to cover the broad spectrum of scenarios that can and often do arise.
New York State has enacted new rules and requirements that apply to all Durable Power of Attorney documents, to become effective on September 1, 2009. The net effect of this legislation is to provide you with more protection. It’s intended to reduce the incidence of potential abuse of rights and privileges you convey to your appointed agent.
Major changes to existing law include the following:
- Agents are required to acknowledge their responsibilities by signing and dating the document. The signature must be notarized.
- If you give your agent the power to make gifts from your assets, special language and a rider must be added to your Durable Power of Attorney. The rider must be validated by two witnesses.
- The authority to create certain types of Trust structures now has to be provided for in an additional rider to the Durable Power of Attorney.
- The ability to set up joint bank accounts, designate insurance beneficiaries, or to change beneficiaries on retirement plans must be specifically authorized with additional riders.
- The new law makes specific provisions for you to appoint an outside party to monitor the activity or your chosen agent. For example, you can require the agent to submit a record of payment and receipts for review to the party monitoring him or her.
- There is a “statutory” form of the Durable Power of Attorney that includes language specified in the legislation. Third parties who are presented with the statutory form of the document must accept it.
An experienced Elder Law firm is your best source for help with drafting the new document specifically targeted to your unique needs. To learn more about effective use of the Durable Power of Attorney, please see Strategy # 17 in Lamson & Cutner’s Special Report, 25 Strategies to Prevent Financial Ruin from Long-Term Health Care Costs here.
