Powers of attorney can be drafted for any adult, even though they may be mentally and physically able to address them on their own. An individual (the “principal”) can execute a power of attorney authorizing another person (known as an “agent”) to act on his or her behalf to handle finances, sign contracts on their behalf, buy and sell investments and other decisions of this nature.
Fed Week’s recent article entitled “Considerations for Providing a Power of Attorney” suggests that you be sure to execute a “durable” power of attorney.
Some seniors may wonder about giving such authority in a power of attorney to someone else while they’re still competent.
In many states, a “springing power of attorney” can be drafted, which takes effect only once a person has become incapacitated. A common example is when a springing power is to take effect only after two doctors, including a senior’s personal physician, have determined that the principal has become incapacitated. Financial institutions are often reluctant to accept springing powers of attorney because proving the principal has become incapacitated
Regardless of the type of power a person selects, it should be reviewed and updated every few years with the help of an experienced estate planning or elder law attorney.
The reason is that a person’s situation may change. This may result in the need to name another agent. Some financial institutions also won’t accept old powers of attorney, and a new one will need to be drafted.
Ask your bank, broker and mutual fund company about whether they’ll accept your power, or if they’ll insist that their own form be used—which is a common practice in the financial world.
Reference: Fed Week (Nov. 1, 2021) “Considerations for Providing a Power of Attorney”