Tuesday, November 18, 2014

Now is a Good Time to Review your Power of Attorney

If you are an older adult, your power of attorney (POA) may be your most important legal document. It is crucial that the right people are named as your agent and that their powers and duties are tailored to your particular circumstances and goals.

A well drafted POA can be the key to protecting financial security for you and your family. A poorly drafted document can be a license to steal.  
A financial POA allows you to name someone you trust to act on your behalf in the event you ever need help managing your income and assets. In your POA document you can control the powers and duties your agent will have.
For example, would you like your agent to be able to transfer some of your assets to your spouse or children to protect them from health and long term care costs? Then you must specifically give your agent that power in your document.  
Pennsylvania Changes Law on Financial Powers of Attorney
Last summer Pennsylvania made important changes to the laws that govern POAs. The most noticeable of these changes take effect on January 1st. This means that December and January are perfect times for you to review your POA and make sure that your document (1) has the right provisions for your situation and (2) is updated, as needed, to conform to the new law.
The law has some new forms that must be used in documents signed in 2015 and thereafter. So, if you review your POA in December you may want to wait until January to sign your new document.
"Hot Powers" and Duties
The new law (Act 95) tries to walk a fine line between allowing you to give your agent the powers you want and protecting you from potential financial abuse. It says that you can give your agent broad powers to transfer your assets and make other changes to your estate plan, but only if you specifically authorize these “hot powers” in your POA.
Older adults should carefully consider whether to give any hot powers to their agent. Some people may want their spouse or a trusted child to have virtually unlimited authority. Others, depending on their own particular situation, may want to ensure that their agent has no hot powers.
It is also important to review the standards of accountability to which you want your agent to be held. Act 95 places strict duties and limitations on your agent unless you designate otherwise. For example, the law mandates that your agent keep your funds separate from those of the agent. You may determine that this is inappropriate in your situation because you want to allow for joint accounts. If so, you can release your agent from that duty in your POA. 
One Size does NOT fit all
Hot powers and the agent’s duties are some of the important issues that you will want to discuss with a lawyer who is an expert in POAs and understands the complexities of Pennsylvania’s new law. Your POA should not be “one size fits all.”  It’s hard to overemphasize the importance of getting truly expert legal assistance to make sure your document is right for you. Don’t take chances with the preparation of your most important legal document.    
Further Information
[The new law (Act 95) applies mainly to POAs used in financial and property matters. POAs that are limited to health care and mental health matters are pretty much unaffected.]

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