Monthly Archives: August 2016
A power of attorney is a document that provides an efficient and cost effective transfer of authority from you to another. With a power of attorney, you can rest assured that in the event of your incapacity, a person you have selected will have the authority to act on your behalf. Without a power of attorney, you expose yourself and your family to costly and potentially confusing legal proceedings, and the intervention of state authority. It is simply a fact that in the absence of a power of attorney, you have created a vacuum of authority wherein the court, not you, makes the call as to the identity of your agent. And that agent will then have the authority to proceed on your behalf, to make binding decisions that may or may not be in accordance with your intent.
CLIENT: What type of situation warrants the need for a POA?
JEFFREY PUFF: Incapacity # the onset of a short-term or long-term debilitating condition that may be physical, mental, or emotional # typically triggers the use of a power of attorney. The authority may be granted temporarily, and it can be withdrawn in the event you change your mind as to either the identity of your agent or the scope of the authority you grant. Also, please understand that there are times when our elders simply choose to allow another to provide personal financial management and are happy to delegate a sometimes onerous task to a trusted agent.
CLIENT: What details should be covered in the document?
JEFFREY PUFF: When a disabling condition arises, unless a document is in place and your agent clearly understands your goals and priorities, families can become confused as to how to proceed. At a time when crisis management may require swift and sure decision making, lack of authority and/or lack of clarity as to your intentions in a crisis can be debilitating. The power of attorney grants the authority to do what you would want to have done; conversations with the agent ensure that he or she is clear as to your wishes and intentions.
Powers of attorney are typically narrowly construed by the court so the document should be detailed. Unless specific powers are granted, they do not exist. Many decisions may be thrust upon your agent # the sale of real estate, the management of financial assets, and the payment of tuition/medical expenses/living expenses for others who are under your financial care. It is critical that your agent is truly able to act in your place and this can only happen with careful and deliberate and comprehensive communication between you.
A power of attorney can be limited to a single financial account, or can encompass the entirety of an individual’s assets. Each asset class should be considered as the client makes a determination as to how much authority he/she chooses to delegate to another.
Real Estate: Whether the power of attorney should grant the agent#s ability to sell, transfer, and/or mortgage real property is an important discussion. Where there are Medicaid considerations, real property may need to be sold. Where there is physical or mental debilitation and assisted living is required, the ownership of real property may simply be an expensive luxury too costly to maintain. The illiquidity of real estate may dictate its sale during a time of financial stress driven by health care needs. In any event, your intentions, developed during a time when you could rationally consider various options, should be implemented by your agent.
Health Care decisions: In a world with the Health Insurance Portability and Accountability Act (HIPAA) limiting a physician#s ability to disclose health care information, it is important for some individual to have the authority to interact with the medical community and to make decisions on your behalf. Treatments, care options, the choice of care service providers and/or in-patient facilities may be required and by creating a power of attorney, it can be reassuring to know that you, not the state, have selected the individual who will be providing instructions and making decisions on your behalf. A health care power of attorney can be incorporated into a general power of attorney, but health care powers are frequently so comprehensive that a separate grant of authority is often necessary. A Health Care Power of Attorney specifically devoted to health care issues is recommended.
Long term Health Care: If your agent is to implement your plans (or create a plan in the face of your long-term incapacity), these powers should be expressly stated. A recent AARP survey of people over age 65 indicated that although two-thirds of them will require some form of long-term care, less than 10% of them had ever had a conversation about what they wanted. The more guidance you can provide your agent and your family, the easier you will make their decisions.
Financial Authority: Money supports your care. A plan should be in place so that your agent understands the authority he/she has been granted and your wishes as to the liquidation/expenditure of your assets. Retirement assets, financial assets, tax planning, all are issues that are ideally scoped out while you are able to participate in the prioritization. Your agent, then, is entrusted to act on your behalf with a clear understanding of your priorities and goals.
Gifting/Discretionary Spending: Unless there is express written authority to make gifts on your behalf, your agent won#t be able to give Christmas or birthday gifts. If you want your agent to tithe to the church or send checks to children or grandchildren for whatever purpose, such authority should be expressly granted. On- going discretionary spending (i.e. educational expenses; financial support for grown children) should be discussed and prioritized with your agent so that he/she is clear on how to proceed in the event of your medical incapacity to continue making those decisions.
CLIENT: How detailed can a power of attorney document get?
JEFFREY PUFF: Powers of Attorney are narrowly construed when interpreted by a court, so the document needs to be quite detailed. Unless powers are specifically and clearly stated, they do not exist. General provisions are worthless. If you want your agent to plan for the possibility of long-term incapacity, I highly recommend adding additional powers. Many of these powers are “disfavored” under the law and can never be interpreted into a document. For example, without express written authority from you to make gifts, your agent won’t be able to give Christmas or birthday gifts to your grandchildren, or even tithe to the church.
CLIENT: What are considerations once the POA is in place?
JEFFREY PUFF: Review the document periodically to make sure the agent you#ve designated remains capable of assuming those responsibilities, and that the provisions are accurate reflections of you current goals and financial realities. Maintain open communication with your agent, and inform him/her as to any changes in your financial/medical prioritization.
CLIENT: Why should you hire an attorney to create a durable power of attorney document?
JEFFREY PUFF: To paraphrase Donald Rumsfeld, #It#s the unknown unknowns that are the problem.# No one knows how their lives will proceed over the course of the next month, the next year, or the next decade. All we can do is prepare ourselves so that whatever occurs, our families and ourselves are protected and prepared to the extent possible.
An experienced attorney can provide insight and understanding in the creation of a document that is too often treated as a throw-away. Although a power of attorney is one of the least exotic legal documents, few understand the importance of a clearly defined grant of authority to our agents. The fact is that a well crafted document created within the context of our hopes and intentions can support our families in times of crisis. The attorney is tasked with working with you so that your intentions are articulated, and then accurately reflected in an enforceable document.
Further, a carefully drafted and properly executed power of attorney is a form of litigation prevention. In a world where families can be extraordinarily aggressive in asserting authority over still-living elders, a defendable power of attorney is the first layer of protection to ensure that your intentions will be honored.
CLIENT: What happens if the power of attorney is not in place?
JEFFREY PUFF: If you do not delegate an agent, the state will. Someone must have authority to act on your behalf – if you are not pro-active in the selection of your agent, the state will step into the void to appoint a guardian. At a minimum, a guardianship action includes two physician#s opinions as to your capacity, and at least two attorneys. All of this depletes funds that could be more productively spent on yourself or your family. Where there is no power of attorney in place, it is not unusual to have between $40,000 and $100,000 expended in legal costs during the first year when no one has authority to act on your behalf. And typically, every major decision (for example, the sale of real property) requires the further intervention of the court.
CLIENT: If your loved one has durable financial POA and becomes ill or incapacitated, how do you make sure you’re immediately able to pay their bills?
JEFFREY PUFF: It is important to understand that the document is effective as soon as it is signed. There is no lag time # no process of #activation.# Upon presentation to a financial institution or health care provider the document should be recognized as a legal grant of authority.
CLIENT: If you don’t have a lot of money and need to use a power of attorney form, would you still suggest trying to get that looked over by an attorney?
JEFFREY PUFF: Just because there isn#t much to fight over doesn#t mean that someone won#t want a fight. The integrity of the document is a critical consideration # and the integrity of the document is what the attorney is hired to provide.
With an attorney, the cost of creating a power of attorney normally ranges between $100 and $300. A comprehensive estate plan including a trust, a will, a power of attorney and a health care power of attorney costs between $500 and $2,500 on average. When these costs are weighed against the cost of potential litigation, either in pursuit of a guardianship of in response to an intra-family feud, they are minimal.
CLIENT: What’s the worst case you have seen?
JEFFREY PUFF: When there’s no POA, legal costs can decimate the estate with an outcome you may not have wanted. The worst calls I get are, #My dad has Alzheimer’s and now he can’t sign a check.# It’s too late then. You need to create a POA before the fact, while you’re still lucent and competent. In fact, I recommend creating a durable POA at 18, when you become an adult. You’re going off to college. There might be a car accident; you could be in a coma. Your family will need to get access to your matters and determine your health care. I have a number of clients who should of, could of, and would of # do not be one of those.
Whether we like it or not, identity thieves are resourceful. Their methods are as varied as the ways in which consumers need to use some form of identification to initiate and complete transactions. It can all be confusing and intimidating, but consumers need not feel helpless against the expanding threat of identity theft. For most of the tactics used by the bad guys, there are countermeasures for consumers. These measures cannot completely ensure that a consumer?s identity is safe, but the odds of becoming a victim decline with each protective step taken. What follows is a non-exhaustive collection of safeguards you can put in place to lower the chances that a stranger will do you harm, even as he adds the insult of pretending to be you.
In the Short Term
Obtain, review, and ensure the accuracy of your credit report from each of the three major credit bureaus. These reports have information on where you work and live, your credit accounts, how you pay your bills, and whether you have been sued or arrested or have filed for bankruptcy. Use random passwords on your credit card, bank, and telephone accounts rather than birthdays, initials, or other obvious passwords.
Make sure that the personal information in your home is secure, especially when you have roommates, employ outside workers, or have service and repair work done in your home.
Look into security procedures for personal information at work. You should be able to find out who can access your information, how your records are kept secure, and what the employer?s procedures are for the disposal of records.
Good Habits to Acquire
Unless you initiated the contact or you know to a certainty with whom you are communicating, do not give out personal information over the telephone, through the mail, or over the Internet. Before sharing information with an organization, use a website or telephone directory to check on its legitimacy.
Remove your regular mail as promptly as possible from your mailbox before a would-be identity thief beats you to it. For outgoing mail, put it into a collection box rather than leaving it to be picked up from your mailbox. Let the Postal Service hold your mail if you are going to be away.
Yes, it may sound like overkill at home, but it still makes sense to shred or tear up all those discarded charge receipts and similar papers with personal information. There are people out there more than willing to go through your garbage if it means they get to use your credit cards.
Travel light, financially speaking. Carry only such identifying information, or credit and debit cards, as you will actually need.
Stay on top of the timing of your credit card bills. A late or missing bill may be a sign that a thief already has taken over your account.
Approach promotional contacts with a healthy skepticism. Phony offers are too often successful in getting personal information straight from the victim himself.
Secure your Social Security number. Keep the card itself in a safe place, not on your person. Ask questions and be satisfied by the answers if any person or business asks for your number. There are some legitimate reasons for giving out your number, but it is not a good enough reason when a business simply wants your number as part of its standard record-keeping.
Computers have their own unique set of threats to the security of your identity, but there is good advice for the wary here, too. Update virus protection software regularly. Do not download files or click on hyperlinks coming from strangers. Use a secure browser and a firewall program, especially if you use a high-speed Internet connection. Avoid storing financial information on a laptop but, if you must, use a strong, random password, do not use an automatic login feature, and always log off when you are finished.