THE FAMILY MENACE

The article explains how an elderly widow was conned and bullied out of her life savings. When her husband passed a way, 83-year-old Betty Halligan signed a Power of Attorney over to her grandson – and deeded her house to him as well. Instead of protecting his grandmother and her assets, the grandson stole from her and began proceedings to evict her from her own home – using the Power of Attorney to do it.

Indeed, reports of Power of Attorney Abuse are increasing across the country. The AARP (American Association of Retired Persons) reports the following:

“[Power of Attorney Abuse] typically begins when an older adult, usually a woman whose husband handled the finances, becomes widowed and starts to fall behind on her bills. Often, an individual’s diminished mental capacity plays a role in the need for help from family or friends.”

And so the Power of Attorney has gotten a bad rap among some, what with all of the reports of Powers of Attorney being used for evil.

But as the old journalism adage goes: The news never tells you about the house that didn’t burn down.

A NEW HOPE

A show of hands: Who here has seen Star Wars?

Unless you’ve been living under a rock with the people who have never heard of Suze Orman, you are most likely at least familiar with the Star Wars saga – and, therefore, with The Force.

In Star Wars, The Force – replete with a “Light Side” and a “Dark Side” – is a metaphysical power that can be used for good or for evil.

So too is the Power of Attorney.

THE ESTATE PLANNER* STRIKES BACK

We have obviously seen examples of the Power of Attorney being used for evil. How about for good?

As I learned as a child when my card-carrying-member-of-the-NRA cousin taught me about gun safety, the best way to protect yourself from the evils of something dangerous is to learn about it. Knowledge and understanding are your best defenses against many harms, such as Power of Attorney abuse.

THE LONG ANSWER

A Power of Attorney designates another person to make important decisions – and act those decisions – on your behalf. This person then becomes your “agent.”

Generally, the purpose of a Power of Attorney is to allow your agent to make these decisions and take these actions in case you are unable to do so yourself. It can ensure that your finances and assets are properly maintained, even in the event of your absence or mental incapacitation. Alternatively (or additionally), it can give someone you completely trust the authority to make important health care decisions for you in case you become unable to do so for yourself (e.g., incapacitated, unconscious, etc.).

A Power of Attorney can be particularly necessary sometimes because hospitals, banks, government agencies, and other such entities may require a written Power of Attorney to allow someone else to act on your behalf. This makes planning ahead very important. Obviously, if you become incapacitated, you will be unable to execute a Power of Attorney during the very time that you need it.

I understand that many of my readers may think, “Well, I’m perfectly healthy right now, so I don’t need a Power of Attorney!” Remember, however, that estate planning is exactly that — planning. If you don’t set up your estate plan until you really need it, then it may already be too late. As I said in an earlier post, the best time to hire an attorney is before you need one.

One popular misconception of the Power of Attorney is that it makes someone your “boss,” granting your agent total control to override your life decisions should you and s/he ever disagree. This is absolutely not true. Your designated agent is just that – your agent. He or she works for you.

Additionally, you can always revoke a Power of Attorney – and don’t let anyone tell you otherwise!

A good analogy for a Power of Attorney is making a copy of a set of keys; you retain the originals for yourself, while giving a copy of they keys to a person you trust. Even if you grant a Power of Attorney to someone else, you can continue to make financial, medical, and other personal decisions for yourself. Additionally, just as you can make as many copies of your keys as you like, you can have as many Powers of Attorney as you like, designating multiple agents. For instance, it is not uncommon for people to designate one agent to handle their financial matters while a completely different person to handle their health care and medical decisions.

There are several different types of Powers of Attorney. As previously mentioned, some allow another person to handle financial affairs for you, while others entrust your health care decisions to an agent. Additionally, while a Power of Attorney can be general, it can instead be limited to a specific purpose or transaction (for instance, selling your car for you). This latter kind is sometimes known as a “Special Power of Attorney.”

Furthermore, you can even designate the time period for which your Power of Attorney will be in effect. You can have your Power of Attorney do one of the following:

• Take effect upon the occurrence of a certain event (i.e., a Springing Power of Attorney, such as your incapacitation.
• Last until a certain event (i.e., a Nondurable Power of Attorney), (such as your mental incompetence).
• Last forever (i.e., a Durable Power of Attorney) – at least, until you revoke it or die.

The most important knowledge of this powerful estate planning tool that is the Power of Attorney is that it can grant someone a great amount of authority over your personal matters. Therefore, it is important that you totally trust the person(s) to whom you are granting a Power of Attorney, with full understanding of the weight of the authority you are giving them over your life.

(For this reason, a neutral attorney whom you fully trust can make an excellent choice as a Power of Attorney designee. Attorneys, as members of the Bar, are subject to additional laws and rules of ethics that govern how they must behave as fiduciaries.)

To learn more about the different kinds of Powers of Attorney and determine how one or more may be right for you, contact a qualified attorney today.

- Joe Stanganelli, Esq.

INTELLECTUAL PROPERTY DISCLAIMER: Use of any and all trademarks in this and other blog entries is protected by the Fair Use Doctrine. Attorney Joe Stanganelli has no ownership of or affiliation with “Star Wars,” “The Phantom Menace,” “A New Hope,” “The Empire Strikes Back,” “The Force,” “The Light Side,” “The Dark Side,” and the like.*THE FOLLOWING DISCLAIMER IS MADE PURSUANT TO THE MASSACHUSETTS RULES OF PROFESSIONAL CONDUCT AND OTHER APPLICABLE LAWS AND RULES OF ETHICS:

• The law will arbitrarily decide who gets your assets, regardless of your actual wishes and if you made those wishes known to anyone.
• The court, in a potentially lengthy and sometimes more expensive process, will decide who is entrusted to administer your estate (again, regardless of what your wishes may have been).
• The person who is selected to administer your estate will lack certain powers that your will could easily have provided htem.
• Intestacy often means uncertainty, especially for your loved ones.

For my own part, I am writing my will:

• …to make sure that particular assets of mine go to those who will properly appreciate them.
• …to designate an executor of my estate so the court doesn’t designate somebody who I don’t trust with this job.
• …to make sure my executor can start his or her job as soon as my will is admitted to probate (without a special provision in a will for this, the process can take weeks longer before the executor can begin his or her job).
• …to grant my executor certain powers so he or she can do what is necessary to settle my estate — without having to run to the court, hat in hand, to get permission.
• …to provide certainty for my loved ones.

It is a good idea to have an attorney review your estate plan whenever you have new developments in your life, such as:

• Marriage
• Divorce
• Birth of a child or grandchild
• Death of spouse, child, or parent
• Death of someone named in your current will
• Being diagnosed with a potentially terminal illness
• Coming into a windfall of money/assets (such as an inheritance, a prize, gambling winngs, etc.)
• You or your family taking on substantial debt
• Giving someone a substantial gift
• Taking on a new job that pays a great deal more
• Owning real estate
• Owning a business
• Owning a pet or other animal

The above is not an exhaustive list, but should give you some clue as to when an estate plan is due for a review. Additionally, anyone with a net worth in excess of $2 million has no excuse to not have an updated estate plan in place.

Additionally, it is a good idea to have an attorney review your estate plan about every two to five years. If it has been more than two years since your most recent estate plan review, strongly consider contacting an attorney who can meet your estate planning needs today.

MORE NEW YEAR NEWS

Now that we’re well into 2009, it’s important for clients and potential clients to realize how new tax laws impact their estate plans.

For starters, the annual gift tax exclusion has been increased to $13,000. The obvious implication of this is that an individual can now give up to $13,000 per donee per year tax-free. Additonally, these gifts can be split with one’s spouse – with the spouse’s consent – for a maximum of $26,000. Indeed, some married couples make their annual gifts as early in the calendar year as possible – to ensure that both spouses are alive at the time of the gifts (after all, a deceased spouse cannot consent).

Because of this, 2009 is a great time to review your trust plan and/or giving program (especially if it has been more than two years since your most recent estate plan review), so as to continue to maximize the use of lifetime gifting strategies. Additionally, all good trust plans, giving programs, and estate plans afford some degree of flexibility – not only to account for a client’s changing plans, priorities, and life developments, but also changes to applicable laws. Contact an attorney for your estate planning needs today.

- Joe Stanganelli, Esq.