The Power of Power of Attorney
This document will help you manage your parents' finances when they no longer can.
Someday your parents may no longer be able to handle their finances on their own. Before that day comes, you need to have the right legal documents to help them manage their money when they can't.
The most important document you will need is a power of attorney, but for a power of attorney to be valid, your parent must be competent when he or she signs it.
Power of attorney lets you handle any financial transaction for your parents -- from signing checks to selling their home. Be sure you have durable power of attorney, which takes effect immediately. A springing power of attorney will not take effect until your parent is deemed incompetent.
If you have siblings, all of you can be given power of attorney, and the document can specify whether you must act together or independently. To prevent abuse by any one child, the document can build in oversight by requiring the power of attorney to answer to a third party. It also can limit powers to prevent you (and your siblings) from changing your parents' wills or beneficiary designations on life insurance policies.
The power of attorney should conform to the laws of the state (or states, if your parents divide their time between two) where your parents live. It is highly recommended you hire an attorney who specializes in elder law to draft this document -- not someone who will just use a standard form that might not provide you with all the powers you need and the protections your parents deserve.
To be clear, a power of attorney document is not a golden ticket. Many financial institutions and brokerages have their own forms that must be signed before you can gain access to your family member’s accounts. Also, be sure to give the institutions a copy (not original) of the power of attorney document soon after it is signed. If you wait years to do this, the institution may ask you to get your attorney to recertify the document.
To learn more about managing your parents' finances when they can't, we highly recommend attending one of our FREE workshops to learn more about how to start, and the most important documents everyone needs to have in place. Contact us today to register, or to schedule a FREE consultation.
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