If you are planning your estate, you may be wondering what you need to check off the list. It can be very beneficial to have power of attorneys. Here is what you should know.
Powers of Attorney go into effect either immediately, or it can be a springing power of attorneys that will go into effect at a future event. For instance, when a doctor certifies you as being incapacitated, that will trigger the springing power of attorney to decide on behalf of the incapacitated person. Some people are more comfortable in not giving an immediate power of attorneys, so they do a springing power of attorneys. Powers of attorney very often can avoid the need for guardianships. If someone’s incapacitated, they’re not taking care of their finances correctly, they’re being financially abused from someone or not taking care of their health correctly; these are all situations where an attorney can be appointed for them.
Powers of attorney can avoid those problems, but there’s also the powers of attorneys where Mom gave her son power of attorney 20 years ago, and then the daughter comes into town and brings Mom to another attorney and has her appointed as power of attorney. We have two powers of attorney out there; we don’t know whether the new one is legitimate or not. Sometimes we still must do guardianships, and we have had cases where we had to get powers of attorney revoked because the agents were taking advantage of their parents. Very often it’s children that are taking advantage; it’s not a stranger.
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A new law went into effect in September 2009. If you have powers of attorney before that, they’re still valid, but a new law went into effect to address some of these problems. Now the agents also must sign; they assume the responsibility. Powers of attorneys, they used to be a page long when I started practicing 37 years ago. Now, they’re about eight pages long. There is what’s called a statutory gift rider, which even before 2009 we were putting that language in there. There’s an additional gift rider that must have two witnesses to it. If you want to authorize your agents to make gifts more than $500 per year, then you sign a statutory gift rider, and I strongly encourage you to do that. That’s essential for Medicaid planning and estate planning in which you authorize your agent to set up trusts for you or do what we’ll call Emergency Medicaid Planning later. If you don’t have a statutory gift rider, you can’t do Emergency Medicaid Planning. You must go through the whole guardianship proceeding.
I urge everyone to have powers of attorney. Do it now while you’re competent to do it. Many times, we get calls; people are in a hospital. They’ve never planned, they’re in a hospital, and they may or may not be mentally or physically competent to sign a Power of Attorney at that time. Do it now. It’s very inexpensive if you want to, but it must be people that you trust because your agents can take advantage of you. When people say they already have powers of attorney, I generally want to see those to see if they have the proper gifting powers. Many of them had gifting powers limited to $11,000 or $12,000 a year; that was the old exception for gift taxes, so many of them are very limited. It’s not going to help you with Medicaid Planning if your agents can only make gifts of $11,000 a year.
Have you yet to sign a power of attorney? If so, contact the experienced Buffalo Estate Planning Lawyer Robert Friedman.