A problem that I often see in dealing with elderly persons or their families is that many of them have done little in the way of planning. Events just happen and little thought has been given to planning for them. Even routine legal documents like powers of attorney may not have been prepared, and very few have explored eligibility for different types of programs which might help pay for long term care, like Medicaid, VA benefits, or long term insurance. This leaves them ill-prepared for the rest of their lives. I would like to urge everyone to plan for their longer term needs. One of the most neglected and least understood planning tools for lifetime needs is the power of attorney. A power of attorney is a basic document which allows someone else to manage your financial matters if you become unable to do so. Powers of attorney are life planning tools, not estate planning tools, since they are directed to helping a person get through the rest of their life and not to distributing property when they pass away. I am convinced that there are probably fewer people with powers of attorney than with wills and in Greenville County, less than half of the estates are administered with wills. The only alternative to a power of attorney is often conservatorship, a Probate Court process to authorize a representative (often a spouse) to act on behalf of an incapacitated person.
However, conservatorship has many disadvantages. It is time-consuming and expensive (I usually tell people to plan for around $3000.00 to get started.) It is also limited. Many Probate judges authorize conservators only to perform the most basic transactions, whether they are acting for a spouse or not. Like life insurance, you have to sign a power of attorney when you don’t need it so that it will be available later when you do. If you wait until you do need it (until you aren’t able to handle your financial affairs yourself), you may not be able to sign a power of attorney because of competency issues. A power of attorney may be just a start along the road of “Life Planning” but it is often a necessary first step. Even a basic document is almost always far better than nothing. Usually it is not hard to get a power of attorney and in most cases it is not even terribly expensive. In many law offices (mine included), a power of attorney is an almost required part of an estate planning effort. If you have not already done so, I would urge everyone to secure a valid power of attorney.
A problem can occur if you do not have a Power of Attorney:
- A house is often in the name of both spouses and one spouse is unable to sell the house, mortgage it or do anything with it without both spouses signing all of the documents. This protects both spouses but can interfere dramatically with their ability to do things that may be necessary, when one spouse becomes incompetent through illness, injury, or disease.
- One spouse may not be able to use the bank accounts in the name of the other spouse in the absence of a power of attorney.
- A spouse may not be able to change beneficiaries of life insurance policies, IRA’s, or other assets without a Power of Attorney.
- Financially, without a power of attorney everything just stops, and it is often hard to do anything with assets in the affected spouse’s name.
