Use the Power of Attorney, Luke!

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: