A Financial Power of Attorney is an Important Estate Planning Tool THOMAS A. CAPEHART, ESQ. GROSS MCGINLEY, LLP If you become incapacitated or are not mentally capable of making decisions, who will handle bank accounts in your name alone, sign checks, deal with your retirement accounts, or otherwise make financial decisions for you? Following a traumatic incident, you and your family may not have the time or ability to address those issues, but a bit of advance thought and planning can be extremely beneficial and potentially save significant time, money, and heartache. You may think if anything happened to you that your spouse or kids could automatically take care of your financial affairs, but that may not be true. To avoid issues and make things easier on your family should something happen to you, it is best to have a comprehensive Durable Financial Power of Attorney in place. What is a Power of Attorney? Generally speaking, a Power of Attorney is a document in which you (the "principal") designate someone to act for you (the "agent"), either for your convenience or because you become physically or mentally incapacitated. Under a financial power of attorney document, you appoint an agent to handle your financial affairs-for example, pay your bills or handle your bank accounts, real estate, business interests, IRAs, other retirement accounts, and insurance. A power of attorney may also authorize your agent to make gifts on your behalf or create or change a retirement plan or insurance beneficiaries, among other things. Given those broad powers, your agent must be someone you trust, such as your spouse, your child(ren), or a trusted friend. Generally, Pennsylvania law requires i) the principal of a financial power of attorney to sign the statutorily required notice, ii) the principal's signature or mark to be witnessed by two individuals (not the agent or the notary) and acknowledged before a notary public, and iii) the agent to sign the approved acknowledgment to essentially act in good faith. The agent must act in accordance with, and within the scope of, the specific powers set forth, act in accordance with the principal's reasonable expectations, if known, and, otherwise, act in the principal's best interests. The Power of Attorney remains in effect unless and until revoked by the principal 36
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or by court order. The agent's authority to act under the Power of Attorney ceases upon the principal's death. What makes a Power of Attorney durable? In the context of a Power of Attorney, Durable means the powers conferred upon the agent are exercisable even if the principal subsequently becomes disabled or incapacitated. Under Pennsylvania law, and absent language to the contrary, all powers of attorney are presumed to be durable. What are Some Benefits of a Power of Attorney? Choosing your agent. For the vast majority of us, it is critically important that we decide who makes decisions on our behalf. Most of us would rather name and appoint our agent(s) to handle our finances and make financial decisions for us, rather than rely upon the court to later appoint a guardian (who you may not even know) to do so. By creating a Power of Attorney, you control who will act for you and can consider the specific powers or limitations of your agent, the best person for the position given your particular assets and circumstances, as well as give thought to your particular family dynamics, such as a second family situation. The power to select an agent of your choosing cannot be overstated. Opportunity to review with your agent. Advance consideration, thought, and preparation of a Financial Power of Attorney provides an opportunity for you to discuss your needs and expectations with your agent before a disabling physical or mental illness or condition undermines that opportunity. You may discuss your specific intent and wishes in detail with your agent, so your agent is prepared to act when the time comes or discuss how your needs are likely to change as your family changes or as you get older. Through a properly drafted Durable Power of Attorney, you can address all of those issues with your agent. Avoid confusion. With your intent and wishes specified and set forth in a properly executed Power of Attorney, you typically avoid confusion and uncertainty regarding how your affairs should be handled during your lifetime in MyNetworkMag.com