Preserving Assets with a Power of Attorney

Article submitted by Patricia M. Larrimore, Esq. of Main Line Elder Law.
For more information, she can be reached at 610-520-1800.

It would be wonderful if we all had a tiny crystal ball that could anticipate unexpected financial surprises. Life would be so much easier if you knew you would grow old with health and senses intact, that you would pass away quietly in your own bed, and that your family would harmoniously agree on the division of your assets. But we don't know what life will bring. Proper estate planning will help preserve assets, protect against potential long term care expenses, and provide a legacy for your heirs.

Protecting your assets is a key ingredient in a well designed estate plan. The cornerstone of the estate plan is making sure your estate planning documents have been prepared and are current. At a minimum each person should have a will, a power of attorney and a "living will." These documents allow you to make certain choices so your assets are managed and distributed according to your wishes and values.

In terms of protecting your assets during your lifetime, possibly the most important document is a well designed power of attorney. If you become incapacitated, it is important that someone you trust be able to step into your shoes and handle your financial matters. The power of attorney is a written document that allows a designated individual, called an "agent" to oversee and handle your affairs.

A power of attorney is a very flexible document and can be customized to suit your needs. It can be designed to go into effect immediately or it can "spring" into effect if you become incapacitated. The duration can be for a specified period of time, or it can be active until it is revoked. It can give very broad powers to the agent, or the powers that are granted can be limited and quite specific.

Each person's circumstances are different and the language in the power of attorney should be designed to reflect those differences. A power of attorney should only be granted to an individual whom you trust and who has your best interests at heart. A power of attorney in the hands of the wrong individual could lead to a wasting of your assets.

One very important aspect of a power of attorney is the ability of an agent to make gifts in order to reduce estate or inheritance taxes or to preserve assets in the event you require nursing home care. Also, if you should become incapacitated without a power of attorney in effect, it might be necessary to have a court hearing in which a judge would appoint a guardian or conservator. A well designed power of attorney can preclude this and save unnecessary expense and emotional turmoil.

One of the most important aspects of an estate plan is that it not be created and then put upon a shelf. It should be reviewed periodically in order to insure that it is still accomplishing your purpose.