Everyone needs to have a durable power of attorney (DPOA) for financial matters. This document empowers someone you choose to act on your behalf if you cannot. It is essential to name a DPOA. PERIOD! You need a highly trusted person named to help manage your entire affairs if you become disabled from accident or illness.
But some people will rely on the DPOA as their only planning tool. This is too often a tragic mistake. The power of attorney can be an avenue to financial abuse of the elderly. Experts recommend the following as alternatives to a sole DPOA:
• Joint agents. Checks and balances for the power of attorney may be created if more than one person must sign off on the exercise of the power. Although this may limit quick decisions in the event of an emergency, the tradeoff for greater security may be worthwhile.
• Care managers. An independent care manager may be hired to evaluate the elder periodically to report to the elder’s health care agent. The care manager can determine whether the appropriate care is actually being provided to the elderly person.
• Gifts. In most cases, the DPOA cannot make gifts of the elderly person’s property. The power of attorney may be drafted to specifically allow for such gifts, if that is desired. There were tax reasons to allow this but given today’s high federal estate tax exemption, such gifting powers no longer are needed for tax reasons. However, if you have a history of supporting charitable entities and would like to be assured your support will continue even if incapacitated, you can include a limited gifting power, specifically allowing your DPOA to continue to make gifts in the manner you have in the past. Be cautious with gifting powers. They can easily be abused by unscrupulous POAs and are a specific source of elder abuse.
• Living trusts. One of the most highly recommended techniques to use a revocable trust that names an institutional co-trustee or successor trustee to step in and manage financial matters when needed. A Trust is in effect when signed and a corporate trustee can really be a secure and comforting resource when needed.”
© 2020 M.A. Co. All rights reserved.
Any developments occurring after February 1, 2020, are not reflected in this article.
Published in partnership with the Trust Team at CoreFirst Bank & Trust.