Power Of Attorney: An Essential Legal Document You May Have To Prepare Yourself

The New York form is extremely comprehensive and may provide a touchstone to compare what you are getting from an online website. My Internet ...
Power Of Attorney: An Essential Legal Document You May Have To Prepare Yourself

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Power of Attorney is an essential legal document for every adult.

What is a Power of Attorney: It’s a legal document you sign and appoint a person, called your agent, to handle legal, tax and financial matters for you if you cannot do so.

Why Every Adult Needs a Power of Attorney: A power of attorney is a vital legal document every adult should have. Especially now, with the worries of the coronavirus and the risk that you might fall ill and be unable to handle financial and legal matters, every adult should have one.

“Go See a Lawyer” is Not Realistic for Many: Bottom line is the best way hands down to have a power of attorney prepared is to hire a lawyer who specializes in estate planning. That being said, if you’ve been laid off because of coronavirus or are fearful of the economic impact, or you are ill and cannot safely meet with a lawyer, or if you are one of the 75 million Americans under directions to stay home and hence cannot meet with a lawyer, you might have to prepare your own documents, such as a power of attorney. One last option might exist, which has not been the norm, meet with an attorney through a web meeting and discuss your needs and have a lawyer remotely prepare your documents. Let’s say the only option, economically or for health or other reasons is to prepare your own document. There are some important points to consider.

Pluses and Minus: There are positives and negatives to the results you might obtain with using either an Internet form, or an attorney. The real answer is that you have to be proactive, approach your planning in a comprehensive and deliberate manner, whichever option you choose. There are a bunch of things to keep in mind as you decide on a course of action that fits your needs and as you implement that plan.

Internet Forms Done Well Won’t Be Easy Peasy: Here’s the part do-it-yourself-ers are not going to like. You can’t just open up a website, fill in a simple questionnaire, create a power of attorney form, print it, sign it, and think you’re all done quick and easy. If you want an Internet form to work even reasonably well, without a lawyer, you have to spend a fair amount of time, do some homework and put on your thinking cap. The part that most consumers just don’t understand is that a good lawyer is not merely going to fill in the standard form on a computer and spit it out for you to sign. Rather, a good lawyer will put much thinking and deliberation into selecting from many different optional provisions, tailoring those provisions, and perhaps much more. What you need to do to have any reasonable hopes of a usable results with a do-it-yourself Internet form, is you first have to learn enough about the options and alternatives the form has, and also to understand what the form means, so you can tailor it to your circumstances if appropriate. This is not a quick and easy cakewalk.

Knowledge Is the Key: The more you understand about powers of attorney the better result you might achieve. Be very cautious when reading information on the Internet. If you search for “powers of attorney,” the quality of information you’ll find varies dramatically. Even some well-known websites contain misinformation and even errors in their discussions of powers. Other sites have pretty good explanations. How can you decide which site is good? Many of the consumer legal websites, even with good information, often limit discussions to very short articles and mere blurbs of information. The issues in planning, preparing, creating, and executing a power of attorney cannot always be adequately be explained to you in a 100-word dialogue box that appears on a legal website. If you must prepare a power on your own because of financial constraints or fears of physically meeting with an attorney because of coronavirus, then you must invest the time (like reading this article carefully for starters) before doing so. The biggest fault with the online legal forms generally, and certainly powers of attorney, is that they don’t require you to watch educational videos, or read informative articles, to get the basic understanding of what the document is, and the decisions you will have to make, before allowing you to create the document on their system. They don’t have lists of cautions of when their documents may not serve your needs. Without this groundwork you might cause yourself more harm than good.

Get Background: If you understand in broad terms what a power of attorney is, the real uses of powers of attorney, how they fit into your overall planning, what ancillary steps to take, and how to identify some of the particular drafting issues in the legal document that need to be tailored to your goals, you will enable yourself to choose what approach will best serve your needs. So, what you do? Start by doing research and reading articles online about the particular legal document you’re going to attempt prepare on your own without a lawyer. This article will help you get going. Obviously, you’re not going to get the background a lawyer has of three years of law school and perhaps years of practical experience, but you need to bone up. It’s highly unlikely that you will appreciate the difference in the various forms you might find online, and certainly how to answer the many different questions that may be posed to you by the online document generation software used to create consumer prepared forms, without some knowledge.

Get a Little Help – Make it a Group Effort: One of the important advantages a lawyer can provide is that they are independent. It is tough for anyone to think objectively through their own situation. So, if you are going to prepare your own power of attorney, hook up with family and friends, or both, to get more objectivity. You can also get a group that you can bounce ideas and questions off of. If the group you create has similar issues to you, e.g. generally similar economic conditions, family status, etc. that might make each member better attuned to the other members’ needs. Also, a group gives you others to share the preparation burden with. In these cautious and worrisome days of coronavirus, your group can meet online.

Free Might Be Better Than Cheap: Before paying a legal website for a power of attorney, first investigate what might be available to you for free.  Many states create what are referred to as “statutory powers of attorney.” These are standard documents intended to work in that particular state. These forms may be accepted more readily in your state than a more comprehensive Internet form. Why pay for something less effective? Some of the state statutory forms are designed for consumers who may not be able to afford an attorney. Try searching the name of your state and the phrase “statutory power of attorney.” For example, for New York this will give you the following link:

Compare the NY Form to Yours: Regardless of what state you live in, if you are going to use an Internet legal website, compare the power of attorney you prepare to the New York form. The New York form is extremely comprehensive and may provide a touchstone to compare what you are getting from an online website.

My Internet Power of Attorney: To better understand what an internet power can do, and some of the issues that might arise, I prepared a power of attorney online using a consumer legal website (and of course paid the same fee you might pay). The key take away to me as a lawyer was that a consumer, such as yourself, will not understand many of the nuances of the questions asked about what to include in your power of attorney document, or how to respond to the many questions asked of you to prepare your document. The suggestions above about getting background before starting the process, and working with friends and family, came out of that experience.

Frequently Use “Help” or “Explanation” Functions: Whatever website you use, take full advantage of the “help” or other explanations provided. Don’t assume you know what something is. Decisions you have to make may be less obvious then you think. Sometimes the questions are seeking you to make a more nuanced decision then the everyday usage of the words in the question might suggest to a lay person. Take your time and read the descriptions and help functions for each decision you make as you wind your way through the process of preparing your power of attorney. This will make the process more laborious for you, but it is worth the extra effort. But, don’t assume the explanations will always being perfect. Even if the explanation is helpful, it may not fit your situation. So, read the guidance provided, but ask each time: “Is this right for me?” If you have any doubt use your lifeline and call the issue into the group, you are working with.

Simpler Might be Safer: I found a rather comprehensive form on a well-known consumer website. If you were sufficiently knowledgeable about powers of attorney, the online power of attorney document generation system would be pretty powerful. What is worrisome, however, is that for a layperson, this level of choice and detail is not only overwhelming but might even let you do harm. The layers of decision were anything but simple.

“Free” is not Always Free: I was a bit frustrated with the fact that what was advertised as a “free power of attorney” ended up cost some bucks. I felt mislead, but that is your call what to pay.

Some key threshold decisions: There are several key decisions you might need to make to generate your online power of attorney.

·      A Power of Attorney may be either general or specific. A General Power of Attorney gives your Agent (the person you designated in the legal document to act on your behalf to handle financial, legal and tax matters if you can’t) broad authority to act for you. A special or limited power of attorney gives your Agent limited authority to act only in specified situations, e.g. to sell your house.  If you’re preparing a power of attorney to address the long list of “what-ifs?” you might prefer a general one that can more broadly address a wide array of issues that might require your having someone help. Powers of attorney are often (but not always) broad or “general” powers. A general power of attorney gives the agent the authority to handle almost any type of legal, financial, or tax matter that may arise. The point of a power of attorney is almost always to empower someone to act on your behalf in the event of some future unknown emergency. Because the nature of that future emergency cannot be known, the approach often taken is to make the power of attorney a broad, all-encompassing document that gives the agents lots of power to act. The flip side to that is, you really better trust your agent. And even if you do trust your agent, consider safeguards (e.g. appointing a co-agent).

·      Most powers of attorney probably should be "durable." That means that even if you fall ill or become incapacitated your power of attorney will remain in effect. That often requires use of a mandated phrase under your state’s laws. If you do not want your power of attorney to remain in effect during times of illness, then the document can be made "non-durable." That might not be advisable.  The most common future unknown is your being disabled. So why create a power that is not “durable” and will be useless during the type of emergency you were creating it for?

·      When will your power of attorney become effective? A “springing” power only permits your agent to act for you if you are in fact ill or incapacitated. While that might sound comforting (“Why should by nephew be able to write checks on my account if I am not sick?”) it may not prove to be. If you can’t trust your nephew while you are well, how and why would you trust your nephew if and when you’re incapacitated? Also, be careful as some states do not permit springing powers. Finally, if you prepare a springing power what has to be done to make the power of attorney effective? You agent might have to get a letter from a doctor confirming you are unable to act for your own behalf. Think how difficult that will be do to in the midst of a pandemic!

Likely Threshold Decisions: So, you might need to make some threshold decisions to get the right form on a consumer legal form website, or you might have to make the above decisions early in the questionnaire to prepare a power of attorney for yourself. In many cases you might opt for a general (broad) power of attorney, that is durable (effective even if you become disabled), and that is effective as soon as you sign it (i.e., not a springing power that only becomes effective on your death). But before making any decision for your document ask: “Is this decision right for me?” Do you have unique or special considerations that might suggest a different answer?

Naming your Agent: This is one of the most important decisions. You want to name someone you can trust and who won’t take advantage. You do not need someone who is a legal or financial expert, they can hire experts. You would like someone who is smart enough to seek help when they need it, and honest enough to do right by you. Do not name a person because you feel obligated to do so (e.g. you have to name your oldest child before your youngest - why?). Name the person you think will do the best job and have the most integrity.

Gifts: Whether your agent should be permitted to make gifts is a “hot” button item that you should expressly address in your power of attorney (clearly and with whatever detail is necessary). While gift giving might not be generally advisable, what if you support one of your children or an elderly parent? If the agent is not permitted to continue your gift giving, your loved ones might face avoidable hardship.

Don’t Get Lost in the Weeds: Be careful not to get so absorbed in detailed decisions for what your agent can do, or not, that you lose sight of getting your power of attorney completed and signed and ready for an emergency. You need to be careful, as some decisions might warrant circumscribing (and the form or document generation software on the website you are using might not address your important issue). For example,

Safe Deposit Box: You could authorize your agent to have access to your safe deposit box, but the bank where the box is located will likely prefer that you have the agent sign a signature card there. That may not be practical to do in the current environment, but at least you’ve given the agent authority. But before you do so, consider what you store in your safe deposit box. Do you have substantial cash or gold bullion that cannot be traced if your agent proves less honest then you thought? Do you keep original documents, like your will in your safe deposit box? What if your will bequeaths less to your agent then the agent might get if you died without a will? Might that entice your agent to destroy the will? You might not be worried, after all your brother-in-law has the highest integrity. Just think through all these issues while you are making decisions to create a power of attorney yourself.

Authority to Sell Real Estate: You might not authorize the sale of real estate, such as your home, which could prove a significant mistake. The form could be even more flexible and permits you to authorize your agent to sell a specific property and even to mandate that the sales price has to be above a certain minimum amount. Be cautious about getting too detailed as no one knows what the future might bring. If you are disabled, which is the most likely scenario for your agent to be acting, why should a house you may not be able to live in be kept? The financial detriment of having to continue to pay carrying costs long after you have moved may be quite adverse. If you set a minimum sales price, what happens if the market declines?

Should you Restrict What Assets and Agent Can Sell: The internet form you prepare might permit you to list specific assets that can be sold. Again, be careful of getting too detailed. Perhaps your agent, if you trust the person named, should be able to sell anything. Here’s an example of how you can create a problem with what seems to be a simple and innocuous question in preparing your power of attorney online. If you indicate that your coin collection can be sold by the agent, what if you also had a stamp or art collection? Does the fact that you expressly listed that your coin collection can be sold, but not that your stamp collection can be sold imply that you did not want the agent to sell other collections? Or is it an indication that I merely forgot to list them? What if you only had a coin collection when you created the power of attorney but started collecting antiques after the form was prepared? What can the agent do with respect to the unmentioned collection?

I am an estate planning attorney, author of 42 books, and more than 1,200 articles. I serve on the editorial boards of Trusts & Estates Magazine, CCH (Wolters Kluwer)

I am an estate planning attorney, author of 42 books, and more than 1,200 articles. I serve on the editorial boards of Trusts & Estates Magazine, CCH (Wolters Kluwer) Professional Advisory Board, CPA Magazine, and the CPA Journal. I’m active in many charitable and community causes and organizations and spend two months/year traveling the country educating professional advisers on planning for clients with chronic illness and raising both awareness and funds for many charities helping people face the challenges of chronic illness. I serve on the board of the American Brain Foundation Board, and its Strategic Planning Committee, and Investment Committee. I hold a BS degree in accounting and economics from Wharton School, an MBA in tax and finance from the University of Michigan, and a law degree from Fordham University School of Law.



source https://www.forbes.com/sites/martinshenkman/2020/03/22/power-of-attorney-an-essential-legal-document-you-may-have-to-prepare-yourself/

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