Should I give my son a license to fly? – Monterey Herald
Question: My son, “Toby”, asks me to sign a power of attorney to name him. Toby says if I lose my marbles he can help me out by paying my bills and taking care of my investments. My sister tells me that if I sign a power of attorney it will give Toby a “license to fly” and it’s a risk to give anyone that power. I see both sides of the argument, but I think I’d feel safer if Toby signed up so he could help me out if I needed him. What do you think?
To respond: Both views have merit. If you appoint someone as your agent under a legal power of attorney that is effective immediately, that person may, at any time, access your accounts or otherwise conduct activities on your behalf. An alternative to a power of attorney with immediate effect is a “spring” power of attorney. A temporary power of attorney provides that if two doctors determine that you no longer have capacity, the document “comes to life” and your power of attorney then has the power to act. Both types of power of attorney documents have advantages and disadvantages.
Before we discuss the differences between power of attorney documents further, if you appoint someone to act as your attorney under a power of attorney (or trustee or executor), you must implicitly trust that person. Beyond your implied trust, the person should have strong business acumen, a proven track record in prudent financial management, and hopefully have experience managing the type of assets you own. The person you appoint is a fiduciary and is therefore legally bound to do what is in your best interest, but starting with someone you trust is of fundamental importance. In other words, if you don’t trust Toby, find someone else you can name.
A power of attorney with immediate effect would allow Toby to access your bank and investment accounts, request statements or tax information, and allow him to communicate with various suppliers such as your telephone, electricity and water companies. , among others. Powers can be broad or limited, depending on what you would like him to do for you when you need help.
A spring power of attorney document grants powers only in the event of incapacity. If Toby noticed that you weren’t paying your bills or taking care of your finances, he could arrange for you to see two doctors who would then write letters about your incapacity. Toby would then take the power of attorney document along with the letters from the doctors to the bank, the investment company, and others who would allow him access. If a few months pass, banks and other institutions may require Toby to obtain new letters from doctors to show that his services are still needed.
Both types of power of attorney documents can cover all financial matters or be specific to certain concerns. For example, you can sign a limited power of appointment that only allows your agent to take certain actions for a limited time.
Power of attorney documents can be abused, but when they are needed, they are invaluable. The key is to select a smart and trustworthy agent, then work with an attorney to put the proper paperwork in place.
Liza Horvath has over 30 years of experience in the areas of estate planning and trusts and is a licensed professional trustee. Liza is currently President of Monterey Trust Management. It is not legal or tax advice. If you have a question, call (831) 646-5262 or email [email protected]