What are the advantages and disadvantages of a financial Power of Attorney?

An essential estate planning document is a "power of attorney" or "durable financial power of attorney".

This is a legal document where you give someone else ("agent") the power to sign on your behalf. The power to, in essence, be you....

You specifically give certain powers -- sign off on lawsuits, buy/sell real estate, set up trusts, etc.

Advantage is this let someone else make decisions if I'm not able to make decisions. This could be because of an injury (hit by drunk, fall down, etc) or sickness (dementia, etc.) or an accident.

If we don't have a power of attorney (and even better a revocable living trust) then to make these decisions, we have to get a guardianship or conservatorship set up. This is time consuming, expensive, and the court will oversee all decisions. Nothing wrong with this but if you don't want to do this, you have a power of attorney (and preferably a revocable living trust).

Disadvantage is someone has the ability to sign your name. To act on your behalf.

So solution to this conflict is choose very carefully who you give a power of attorney to -- make sure you trust them! If you wouldn't give them a blank check, don't give them power of attorney.

With a signed blank check they can only take what's in your account -- with a power of attorney they can take everything.

So its a very powerful legal tool but in the wrong hands it is a dangerous weapon.

And if you are going to have this useful tool, make sure it does what you need it to do.

We often find that the typical "estate planning" power of attorney does very little to help us plan for, or react to, a long term care crisis. In that situation, we might as well not have a power of attorney.

So make sure you understand fully what the power of attorney does for you, what it doesn't do for you, and then make sure the one you get fits in with your overall plan.

If you have any questions about Estate Planning or Elder law (Medicaid, Special Needs, or VA Pension), feel free to give us a call at 205-879-2447 or contact us through our website http://www.alabamaelderlawyer.com/con....

John G. Watts
Watts & Herring, LLC
Birmingham and Madison Offices in Alabama
We represent consumers from all parts of Alabama

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